Eke Panuku and NZ Super Fund form landmark investment partnership
POSTED ON: 13 June 2022
Commercial partnership makes funding available to accelerate urban regeneration in Auckland
A new investment partnership between the NZ Super Fund and Eke Panuku Development Auckland aims to accelerate and improve the regeneration of town centres in Tāmaki Makaurau.
Mayor Phil Goff says that partnering with the NZ Super Fund will give Eke Panuku access to greater funding.
“It means that Eke Panuku will be able to move faster and go further in the critical work it is doing to rejuvenate town centres across Auckland.
"There’s a huge amount of work needing to be done, but constraints in the funding council is able to make available to it in challenging financial times,” Mayor Goff says.
“The Super Fund is looking for projects that are long term. It is a reliable and ethical investor, and the return it gets on its investment goes back to Aucklanders and New Zealanders to meet their needs in retirement. All of those things make the Fund an excellent investor for Eke Panuku to partner with,” he says.
Paul Majurey, Eke Panuku Chair, says: “Partnering with the NZ Super Fund will give us access to long term Aotearoa-based capital, meaning we can adapt to market changes over time and widen the footprint of our work to transform Auckland’s town centres. Importantly, this new funding will mean we can up-scale and accelerate development plans and improve outcomes for Auckland. Our focus is on well-designed, mixed-use developments that reflect the Māori identity of our city, integrate with transport connections and incorporate sustainability.”
NZ Super Fund CEO Matt Whineray is enthusiastic about the partnership. “We see a commercial opportunity in large-scale (>$100 million), climate-friendly property investments and Eke Panuku is an ideal partner for us. The broader property development market should gain additional confidence and delivery assurance from the funding, commercial rigor and governance focus we add to the partnership. In addition, the strong capability and focus on achieving leading environmental and community outcomes that Eke Panuku is known for aligns with our sustainable finance approach.”
The partnership is focused on development opportunities in Eke Panuku strategic priority locations (as set by Auckland Council), such as Northcote and Panmure. Each project will be considered on a case-by-case basis with NZ Super Fund investments made in line with its commercial mandate. Control and approval of urban development outcomes will remain with Auckland Council, with local boards, mana whenua and communities fully engaged on the projects.
In recent years the NZ Super Fund has built a substantial portfolio of New Zealand property investments including a series of partnerships with local developers including Russell Group, Classic Group and Ngāi Tahu Property. The Crown-owned investment fund, which invests on behalf of taxpayers in order to help pre-fund universal superannuation, has more than $8 billion invested in New Zealand, and is looking to increase its exposure to domestic real estate and infrastructure.
Questions and Answers
Q. How will the partnership operate?
A. At a high level, under the NZ Super Fund’s SuperBuild model, it would acquire part-ownership of selected Eke Panuku development sites with set urban development outcomes retained. It would then progress in partnership the urban regeneration plans already agreed with Auckland Council and provide opportunities to partner with others on individual projects. The partners will also explore how the scale of this programme could be increased, over time, to address Auckland Plan 2050 strategic objectives in a more ambitious way.
Eke Panuku has responsibility for identifying potential partnership projects and will retain control over urban development outcomes (which are agreed with Auckland Council) for projects. Control over project outcomes and associated powers, such as those under the Public Works Act, are not being compromised or transferred. Eke Panuku will retain control over project design, delivery and material changes over the life of the projects. Eke Panuku will also manage the process to select a lead development partner, refine the master plan, and deliver the urban regeneration project.
Eke Panuku will present to the partnership opportunities for investment. When assessing these opportunities, both Auckland Council (via Eke Panuku) and NZ Super Fund can choose which to invest in. All investment decisions will be based on thorough due diligence and made on a commercial basis and in line with set urban development outcomes. The NZ Super Fund will provide development funding, potentially including funding land acquisition costs, and receive a return. Completed developments will be sold to potential investors (noting that Auckland Council does not currently wish to retain ownership of completed assets). The NZ Super Fund may be a potential investor/acquirer of these assets post-development, for example as part of a ‘build-to-rent’ investment portfolio.
Q. How will ratepayers benefit from the partnership?
A. Funding and financing is a major constraint for Auckland Council. With investment from the NZ Super Fund under its SuperBuild model, we will be able to deliver a bigger, faster and more impactful urban regeneration programme than we could do solely with the funding available from Auckland Council. This partnership will provide access to long term capital with the capacity to invest throughout the property and economic cycles. Secure funding will be injected at the start of development projects, expediting, and providing assurance over, project delivery.
The partnership will be focused on large-scale, master-planned developments with strong community and environmental benefits: energy-efficient and climate-friendly projects with proximity to transport nodes and a focus on sustainable procurement practices.
Q. How will the NZ Super Fund benefit from the partnership?
A. The NZ Super Fund is targeting investment in brownfield urban regeneration as part of a broader real estate investment strategy. It is also required, by Ministerial direction, to actively consider opportunities to invest in New Zealand. The Fund is large in a New Zealand context and it can be challenging to find domestic projects big enough to make a meaningful difference to Fund performance. This partnership is a means of accessing a large scale opportunity to invest in urban regeneration in Auckland that both offers the financial returns the Fund requires, and is consistent with our desire for our investments to have positive social and environmental outcomes. Eke Panuku, as a respected urban regeneration agency with a well-earned reputation for successful delivery in complex and at times difficult environments, also brings value to the partnership.
Q. How much is the Super Fund expecting to invest via the partnership?
A. This will depend on the nature and volume of investment opportunities that the Fund decides to proceed with. As a general guide we believe the scale of the potential investment opportunity here to be significant with over $1bn of land and vertical development opportunities over the next decade; however, the actual level of investment will be dependent on the specific opportunities presented and whether they are commercially attractive to the Fund.
Q. How quickly could the investments be made?
A. We’re hoping to get agreement on an initial investment before the end of the year. We anticipate this partnership agreement being in place for many years and supporting Auckland’s growth for decades to come.