Australia’s second biggest super fund wants more social and affordable housing to be part of its target for AUD 50bn of infrastructure investments by 2030, James Arbuthnott writes.

Arguably the most pressing conundrum Australia’s federal and state governments need to solve is the country’s housing affordability crisis.

So, when the federal Labor government came to power in May 2022, it soon called on the now AUD 4tn (USD 2.6tn) superannuation sector to help fund its big housing build.

It took a while to get the setting right to minimise risk for pension funds and other private investors. They include government subsidies from an AUD 10bn Housing Australia Future Fund and a PPP-like structure and concessional loans to allocate that money.

The AUD 330bn Australian Retirement Trust (ART) is one that says it can do more to assist.

ART and fund manager Queensland Investment Corporation (QIC) are now in talks with the Queensland and other state governments to build more social and affordable housing, ART’s Michael Weaver, general manager of mid-risk assets and the UK said in an interview.

The pair set up the Queensland Social Housing Fund (QSHF) three years ago to build more housing using cheap government debt and subsidies, allowing more homes to be built per dollar than could be without them.

“Governments have not been able to invest as much in social housing as they perhaps did many years ago,” says Weaver (below), who handles infrastructure, real estate and the private credit divisions of ART, told Infralogic.

“We’ve spoken to QIC and the Queensland government about expanding that arrangement, and potentially in other states, if they’re interested in the ideas that we’ve put to them. So, we do think there’s an opportunity there.”

ART seeded the QHSF via AUD 150m (USD 97m) in subordinated debt alongside AUD 300m from national housing agency, Housing Australia, and up to AUD 280m in senior loans from the federal housing agency’s Affordable Housing Bond Aggregator as well as ongoing support from the Queensland government.

“We thought this was the sort of investment that could make sense for us and make sense for them,” he says.

The QSHF’s purpose is to ensure the private sector helps community housing providers and the state government to greatly expand the number of social and affordable homes in the state. It plans to deliver 53,500 social homes by 2044 and is so far overseeing seven projects and around 600 social and affordable houses either built or under construction.

Infralogic reported in December last year that the Queensland government’s AUD 2bn Housing Investment Fund was fully allocated. Meanwhile the Victorian government has been working to deliver social housing via its PPP-like Ground Lease Model, for which the state has recently shortlisted three consortia for its latest round.

Numerous other private investors and sponsors are now pouring money – mostly debt – into housing in Australia.

Tetris Capital is one of the most prolific. The Housing Australia Future Fund (HAFF) projects it is leading includes the development of 171 apartments in Western Australia’s state capital, Perth, and in September it reached financial close on two HAFF projects in Queensland’s capital, Brisbane.

Meanwhile PGGM‘s infrastructure investor and developer, Invesis, is set to close six HAFF projects by the first quarter of next year, Simon Hunter, head of Australia and New Zealand told Infralogic in September.

ART’s social housing play is part of its plan to invest more than AUD 2bn into impact investing by 2030, including its recent investment in Macquarie‘s Green Energy and Climate Opportunities Fund (MGECO).

Capital recycling

ART formed via a merger of Queensland’s then two biggest super funds, Sunsuper and QSuper, in February 2022. It has since swallowed, AvSuper, Commonwealth Bank Super, Woolworths and Endeavour Group, Alcoa Super and Qantas Super.

This left ART with many smaller assets, as well as some sizeable ones, in its portfolio that it has been selling either due to their small scale or because it was overweight in some.

That includes offloading airports like Queensland Airports, which it, TIF and State Super SAS Trustee Corp sold a majority of to KKR earlier this year.

“We’re willing to sell assets that are still good assets, but they can [also] be just too small for our portfolio, so comfortable to sell, if it makes sense,” he said.

“[Direct asset sales] take time and consideration and we’re fortunate that, as a growing fund, we don’t need to be rushed into anything. We will take our time to run a thorough process and arrange sales if it makes sense for us and the other stakeholders,” Weaver adds.

He told The Australian Financial Review in December 2024 that technically everything is for sale for the right price.

Perhaps ART’s best recent payday was its AUD 300m AirTrunk investment before the data centre business was sold for AUD 24bn last year. At the time, local media reported ART had cashed out at around AUD 1bn.

ART declined to comment on the money it made from the sale, but Weaver said, “that was a great result for our members selling last year”.

China’s Gingko Tree Investment, ART and State Super are considering selling Sweden’s A-Train either partly or via a full sale, Infralogic reported in August.

Infralogic also reported on 30 October that ART and CareSuper are selling Australian small-scale solar farm and battery producer Sustainable Energy Infrastructure via advisor ICA Partners.

Targeting AUD 50bn in infra by 2030

Given money is constantly flowing in from Australia’s compulsory super scheme, which is now at 12% of every individual’s salary, ART has to keep buying while it sells.

Weaver expects to invest two-to-four equity cheques of more than AUD 500m each year to meet its 2030 target of more than AUD 50bn of infrastructure assets under management by 2030, keeping it in line with a roughly 12.5% allocation of its money to infrastructure as its member base and their account balances grow.

Around half ART’s AUD 35bn now invested in infrastructure stakes are local and the other half offshore, and this ratio is expected to remain steady.

“We expect that to continue, and we’ll keep expanding our portfolio here, but we also look at opportunities offshore,” he said. “We’re fortunate that we have a very good portfolio of existing assets, and many of those provide opportunities to grow within them and keep investing.”

ART is not currently bidding on deals in Europe or the UK but there are early-stage opportunities that could be considered, Weaver adds.

It has 35 people in its infrastructure team, including six in the UK, and its headcount should rise in line with the growth in assets under management.

It directly manages its 11% Heathrow Airport stake and now 28.3% share of South Australian electricity transmission business ElectraNet, according to Infralogic data.

ART recently took up its pre-emption right to acquire a further 17.1% stake in ElectraNet from Macquarie-managed The Infrastructure Fund – one of many open ended, core infra funds in Australia being wound up.

The fund’s other recent local investments include buying QIC’s 33% stake in New Zealand electricity distributor Powerco last year, of which it already owned 25%. Powerco has since then agreed to buy Igneo’s stake in the New Zealand electricity distributor Firstlight Network from Clarus as part of the sale of Clarus by Igneo Infrastructure Partners. Clarus’ gas distribution network is being sold to Brookfield.

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Brisbane Airport, in which ART has a 20% holding, has over the past decade built out its assets and plans to expand further, allowing ART to invest more over time, Weaver said.

“Brisbane Airport is a perfect example where over the last 10 years they have built another runway, they have plans to continue to expand terminals – those things cost money, and [so] we’re able to invest in assets that we already own,” he said.

While ART did not provide new money to fund the around AUD 1bn of new runways, the airport withheld dividends for several years to effectively pay construction costs and this strategy could also be used for future capital requirements like new terminals.

Brisbane Airport has more than AUD 5bn in planned investments in the next decade, including another terminal, refurbishments to existing ones and investments in commercial land, according to its website.

“Realistically, we’re comfortable with the program we have and how we invest, subject to governance expectations that you would expect from a very large institutional investor,” Weaver said.

The energy transition sector will remain a focus, Weaver adds. “We think that will continue to provide good opportunities over time.”

“We’ll continue to look at new opportunities that come our way in any sector that can be attractive,” he adds.

Meanwhile, ART, as are other super funds like AustralianSuper, is hoping Australia’s federal and state governments will find a way to sell more publicly owned infrastructure.

In its submission to the 2025 Economic Reform Roundtable hosted by Australian Treasurer Jim Chalmers, ART called for a return to state government asset recycling, where the proceeds from the privatisation of infrastructure is used to fund new infrastructure.

In 2016, the Victorian state government sold a 50-year lease on the Port of Melbourne for AUD 9.7bn to a consortium including QIC, the Future Fund and Global Infrastructure Partners. Sale proceeds were reinvested into removing train level crossings and a small part to rural infrastructure.

New South Wales sold numerous state-owned infra-assets, including a 99-year lease on Port Botany and Port Kembla to an IFM-led consortium in 2013 for AUD 5.07bn and from 2015 to 2017 it fully or partially sold three electricity networks and distributors under long term leases.

It later partially built and then sold the giant Westconnex motorway between 2018 and 2021, reaping more than AUD 20bn.

The money raised was used to fund new infrastructure including the five new metro rail lines in Sydney.