This article is from the Australian Property Journal archive
BABCOCK & Brown is continuing to beef up its position in Europe by spinning off a €233 million ($A386 million) retail property portfolio into a new vehicle.
The new investment vehicle is a joint venture with an unnamed European based investor, with whom Babcock & Brown has an existing relationship.
Babcock & Brown has sold approximately 70% of its Swiss retail portfolio comprising 53 properties, which it solely owns.
The Swiss retail portfolio is the initial portfolio of the JV and it is expected that the JV will look to recycle capital over time into other European real estate opportunities originated by Babcock & Brown. Babcock & Brown will earn base fees on the gross asset value of the portfolio, acquisition fees on new investments and potential, performance fees.
The life of the JV is expected to be at least five years with an expected total life of seven years.
Babcock & Brown’s global head of real estate Eric Lucas said the divestment represents approximately €233 million of the €750 million in “real estate held for sale” earmarked for disposal as at June 30 2007.
“We are pleased to be able to create this JV with a strong existing relationship in the region, which fulfils Babcock & Brown’s objectives of profitably and efficiently recycling its capital whilst retaining long term management of the assets it originates.
“Although this disposition involves assets solely owned by Babcock & Brown, disposition activities for the remaining non-strategic European retail assets jointly-owned with GPT are also proceeding smoothly,” he added.
In August this year, Babcock & Brown syndicated a German property portfolio, comprising 37 ass retail, office and mixed use assets jointly owned with the GPT joint venture for approximately €240 million ($A390 million).
The investment bank is running its own race after it cut its ties with GPT in June this year following a two years partnership.
In June this year, GPT decided to run its own shoe by buying Halverton Real Estate Investment Management for $94 million, a United Kingdom based pan European investment and asset management company.
In the two years as partners, Babcock & Brown and GPT invested over $6 billion in the JV fund, and is forecast to grow to around $9 billion when the total committed equity capital of $2.2 billion is fully invested.
And as part of the separation agreement, over the next three years, Babcock & Brown has the opportunity to spin off funds from properties it manages through the disposition of JV fund assets, other than where Halverton is the asset manager.
Australian Property Journal
