This article is from the Australian Property Journal archive
THE Industry Superannuation Property Trust’s could be making a return as a major property buyer by snapping a 25% stake in Westfield Doncaster for around $400 million.
ISPT is one the largest institutional property investors in Australia and holds over $7 billion in direct property on behalf of 26 industry superannuation funds including Australian Super, Hesta, Cbus, CareSuper and HostPlus.
According to property sources, the flagship ISPT Core Fund which has $5.415 billion of assets is the front runner for the asset, in a race involving the Singapore Government’s hungry property arm GIC Real Estate.
ISPT went on a property diet during the Global Financial Crisis by shedding off noncore assets. During the GFC period, the ISPT Core Fund losses were contained to the revaluation reserve, resulting in a $150 million surplus for the financial year 2009/10.
FY10 total $328.4 million including the Riverside Centre North Terrace in Adelaide to a German real estate firm Rickmers Immobilien as reported exclusively in Australian Property Journal.
Although the fund is continuing to trim down in the coming year to 60 high quality assets, with a further five sales forecast in financial year 2011/12, it is believed that the fund is shopping for good quality assets.
And the acquisition of a 25% interest in Westfield Doncaster from LaSalle Investment Management’s Asia Property Fund, will indeed signal a big comeback into property for ISPT.
In its annual report, ISPT Core Fund’s fund manager Tony McCormick said “Good property deals are scarce, however we have the resources available to take advantage of opportunities as they arise,”
“The fund saw few opportunities for acquisitions of standing investments which offered good long-term value, with pricing generally reflecting excessive demand from overseas buyers, fellow institutions and high net worth individuals.
“Although a procession of secondary or highly levered assets have been offered to the fund during the financial year, the assets have not met our risk return investment profile. Nevertheless, we remain vigilant for opportunities in accordance with our three year investment strategy,” McCormick said.
Although Westfield valued its 50% in the centre at $682.5 million on a yield of 5.75%, meaning LaSalle’s 25% is valued at around $341.25 million. However LaSalle is understood to be asking around $400 million.
In fact, Westfield is selling its 25% in the centre to a new vehicle Westfield Retail Trust for $341.3 million.
LaSalle will make a capital value loss from the divestment after it teamed up with Prudential in August 2007 to buy the 50% stake from Westfield for $738 million, which at the time was the single largest asset sale.
In 2008, Westfield and LaSalle completed a $600 million redevelopment to double the size of the centre to 120,000 sqm with approximately 420 stores and parking for 5,000 cars.
Westfield Doncaster would be prized asset for the ISPT Core Fund and increase its exposure to the retail sector for around $1.8 billion, although the fund remains heavily weighted in the office sector with around $3.4 billion of assets.
Westfield Doncaster would be the most expensive retail property the fund will own, next to the Wintergarden shopping centre and car park in Brisbane and the Forrest Chase shopping centre in Perth, which are separately valued in the range of $150 million and $249 million.
Meanwhile the retail property market is breathing to life again.
Recently the CFS Retail Property Trust bought four DFO branded outlet centres for $498 million and yesterday Westfield Group announced it was selling a 50% stake in 54 shopping centres in Australian & New Zealand to a newly created entity, Westfield Retail Trust, which will be the third largest A-REIT, behind Westfield and Stockland.
A recent research by Jones Lang LaSalle shows transactions totalled close to $3.183 billion at the end of the September quarter, exceeding the $2.539 billion total annual sales figure recorded for the full year of 2009.
|
State |
2008 |
2009 |
As at Q3 2010 |
|
NSW |
$394,825,000 |
$206,440,000 |
$876,918,085 |
|
QLD |
$485,525,000 |
$872,937,000 |
$319,100,000 |
|
SA |
$253,680,000 |
$288,900,000 |
$229,041,000 |
|
VIC |
$311,002,600 |
$595,826,900 |
$848,625,000 |
|
WA |
$341,918,700 |
$532,514,000 |
$860,000,000 |
|
ACT |
$- |
$41,900,000 |
$49,075,000 |
|
Grand Total |
$1,786,951,300 |
$2,538,517,900 |
$3,182,759,085 |
JLL is expecting some major deals to conclude before the end of 2010 including the $700 million sale of Top Ryde City in Sydney and Westfield Doncaster.
Australian Property Journal
