The New Zealand Super Fund is linking up with the Auckland Council's development arm to potentially undertake some substantial urban regeneration projects in the country's largest city.
NZ Super is of course the $57 billion fund charged with assisting New Zealand's future superannuation payment requirements and it is now a very substantial investor both in New Zealand and globally.
It is teaming up with Eke Panuku Development Auckland in a move that Auckland Mayor Phil Goff says willl 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,” Goff said.
“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 said.
There's no specifics talked about in terms of how much the Fund might be tipping in, but it does have very deep pockets and the media release announcing the partnership talks both about "large-scale (over $100 million), climate-friendly property investments" and "over $1 billion of land and vertical development opportunities over the next decade".
NZ Super Fund chief executive Matt Whineray said the fund was hoping to reach 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," he said.
The partnership is to be focused on development opportunities in Eke Panuku strategic priority locations (as set by Auckland Council), such as Northcote and Panmure.
Each project is to 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.
In terms of how the partnership will operate, the statement from NZ Super Fund and Eke Panuku says "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 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," the statement says.
It says that 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."
9 Comments
Given the hugely distortionary affect the NZ Superfund had on the Light Rail project, turning it from a street-level project to a gold-plated monster, I really hope some lessons have been learned here. The Superfund seemed more interest in locking in returns for decades, regardless of what the actual need for transit in Auckland was. I remain cautious.
Given that the rest of the country expects Auckland to underwrite development in their backwaters that their own tiny population bases can't possibly afford, or take on a huge portion of the immigration burdern that the regions can't but then gets their panties in a bunch when they ask for more infrastructure to actually cope with it, this really is the least they can do. If anything there is more likelihood the Superfund will use this as a chance to strip even more revenue out of Auckland, like they tried to do with the light rail scheme.
Also, a reminder, a huge portion of those taxes are also raised within Auckland. You might not like how much is left over for your part of NZ if we're going to start divvying them up by the province in which they were collected.
I fell very very nervous about this whole thing.
"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,” Goff said.
I was hoping that with Goff and Brown having maxed out Ak ratepayers in debt, that this would mean that in future they would be forced to operate under severe restraint. And prudence.
Alas, this sounds like a work around. Probably indirectly. ie This funding would go towards things that the Council should fund, but allowing Council to then continue wasting core ratepayer money on vanity non-commercial projects and social work.
"....with NZ Super Fund investments made in line with its commercial mandate."
Well if employed, this means that it will want full payback. To the detriment of future Ak ratepayers.
The silly thing is that the council is maxed out because they and their mates have been NIMBYs, pushing expansion to the fringes rather than allowing intensification. Maintaining sprawl is prohibitively expensive, and now this is causing them money troubles.
The idea they can just magically do it all with less through "efficiencies" is probably going to fall way short in actuality.
And this is why we'll never break the vicious cycle we're in.
Auckland continuously needs more inhabitants to pay for past overspending, so it has to rinse and repeat. This level of indebtedness and growing population can only mean even more stretched infrastructure in future.
About time council lives within it's means - like the rest of us have to!
If they bite the bullet, stop coddling the NIMBYs, and allow intensification near the CBD and especially along arterial transport routes, things will be far more economically sustainable. Pushing sprawl to the fringes is refusing to live within their means, just to suit their mates.
The former City Architect of Melbourne noted that for every million of population they added along existing arterial transport routes instead of expanding at the fringes, they'd save an estimated $110 billion.
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