Future Fund property head leaves, causing reshuffle

The Future Fund Management Agency of Australia has continued to reorganise its investment team after announcing the resignation of its experienced property team head, Barry Brakey.

In a release on Tuesday, the sovereign wealth fund said that following Brakey’s departure it will effectively split his role in two, with Stewart Tillyard heading unlisted property and the listed portions being assigned to Sarah Carne, who becomes head of listed tangible assets.

In addition, it named James Fraser-Smith as head of unlisted infrastructure and timberlands, Craig Dandurand to oversee debt, and Bern Samild to handle the fund’s alternatives investments. These appointments are in addition to Bjorn Kvarnskog, who already is in charge of listed equity, and Steve Byrom, head of private equity.

The Future Fund had A$141 billion ($107.28 billion) of assets under management at the end of March, of which A$8 billion is invested into property in Australia, Europe and the US. The agency has undergone other recent structural changes too, including appointing Wendy Norris and David George as two deputy chief investment officers under CIO Raphael Arndt in March. Norris is responsible for private markets, while George covers public markets.

Brakey joined Future Fund in January 2008 from Pinnacle Property Group, which he co-founded in 1988. He appears not to have another immediate role to go to. A spokesman for Future Fund told AsianInvestor that “Barry is considering where to find his next challenge and we wish him the very best”.

One Australia-based head of real estate at an international fund house, who knows Brakey but declined to go on the record, said he appears to have departed on his own terms. “I think Barry isn’t retiring, he’s just reassessing a few options. While I don’t believe he’s got anything in the pipeline he will probably resurface in the investment industry.”

He added that Brakey was generally seen as a good manager by market players. “He’s really nice, savvy, creative and very fair. He always treated general partners well, in a constructive manner. If he didn’t do something with you he always gave constructive feedback as to why.”

In addition, the real estate head noted that Brakey made some smart investments over his tenure, which began around the time of the global financial crisis in 2008.

In October 2009 Brakey oversaw the fund’s purchase of a 33% interest in the Bullring shopping centre in the UK city of Birmingham for £210 million -- its first direct property acquisition. This was followed by big-ticket direct acquisitions including office space on the Champs-Elysees in Paris and on 3rd Avenue in New York. It also invested $1 billion into the real estate vulture fund of Canada’s Brookfield.  

HIGH PERFORMING TEAM

David Neal, chief executive officer of Future Fund, said in its statement that Brakey had “been instrumental in the creation of the property portfolio and its significant contribution to the A$80 billion of investment returns produced since [Future Fund’s] inception [in 2006]. He has recruited and developed a high-performing team”.

The fund manager said the decade-long role had led to a great deal of travel for Brakey and that it made sense for him to hand off these duties to Tillyard, who is younger than him. “If you look at its investments, almost none are in Asia but instead they’re in the US or Europe. I think Barry’s spent an inordinate amount of time on planes or in hotels. Stewart’s a bit younger than Barry but has been with him a long time, so he’s well placed to take over.”  

The spokesman said that the Future Fund’s investment team reorganisation was part of a longer-term strategy.

“We’re aiming to create more flexible teams with the ability to take up opportunities wherever we identify them,” he said.

However, he added that the fund wasn’t changing its fundamental investment strategy and that the fund would “dynamically manage the portfolio and seek out the best risk-adjusted returns regardless of where they are by asset class or geography.”

The spokesman did not respond to AsianInvestor requests for details on the level of performance of its real estate portfolio during Brakey’s decade-long leadership. However, Future Fund has had an annual performance of 8.5% per annum on average for the past 10 years, well above its target benchmark return of 6.7% per annum.