Singapore’s sovereign wealth fund, GIC, has followed up a joint venture with Goodman Property Trust, announced on Tuesday, by signing a similar joint venture on Thursday to acquire 49% of 5 New Zealand malls from Westfield operator Scentre Group.
The 5 malls – Albany, Manukau, Newmarket, Riccarton & St Lukes – have a combined gross value of $2.1 billion.
The 4 Westfield malls excluded from the deal are Glenfield & WestCity in Auckland, Chartwell in Hamilton and Queensgate in Lower Hutt [incorrectly referred to as Eastgate in the original version of this article].
While Goodman said its joint venture was GIC’s first transaction in New Zealand, the Singaporean fund has been a Westfield partner in Australia for 7 years. Joint ventures represent 28% ($A10.2 billion) of Scentre’s $A39.7 billion mall portfolio in Australia.
Scentre chief executive Peter Allen said yesterday: “A strategic focus of Scentre Group is the introduction of joint venture partners into some of our wholly owned assets, with the capital proceeds available for redeployment into our development pipeline & the repayment of debt.”
The transaction represented a 4% premium to the book value of the 5 New Zealand malls as at 30 June and an effective implied cap rate of 6.8%.
Scentre will retain a 51% interest in all 5 malls and will continue to provide property management, development, design & construction services.
The transaction remains subject to Overseas Investment Office approval.
Scentre Group has interests in & operates 47 Westfield malls in Australia & New Zealand, containing 12,500 retail outlets, has a total $A39.4 billion of assets under management and has 2000 staff.
It will receive proceeds of $NZ1.036 billion from the transaction, which will initially be applied to repay debt. Closing is expected by 31 December.
Mr Allen said the transaction wasn’t expected to materially impact the group’s funds from operations, but its pro forma gearing would be cut from 37.6% at 30 June to 35.5%.
Performance figures the company gave in its third-quarter result on Wednesday were:
Australia: specialty retail sales $A10,105/m², specialty retail growth 3.6% for the 12 months to 30 September, average specialty store rent $A1551/m², growth year on year 1.9%
New Zealand: sales $NZ8685, growth 1.7%, rent $NZ1140/m², growth 0.7%.
Scentre said in the results announcement the group was undertaking predevelopment activity on $A3 billion (its share on Wednesday $A2 billion) of development opportunities, and it expected $A1.5-2 billion of developments to start over the next 3 years.
These developments included Albany, Newmarket & St Lukes in New Zealand and 12 Australian malls.
Attribution: Company release.