This article is from the Australian Property Journal archive
General Property Trust has returned to its core roots with the purchase of a 50% interest in the Highpoint Shopping Centre in Melbourne and the management rights to the centre for $621.2 million, excluding acquisition costs.
GPT received the green light after Myer, who is the largest tenant at Highpoint, decided not to exercise its right of refusal over the 50% interest in the centre.
GPT expects a first year yield of 5.5% on its investment.
Under the agreement, GPT will undertake property and asset management at the centre and will also provide development management services in relation to future expansion and development.
The addition of Highpoint takes GPT’s retail portfolio to include interests in 16 Australian shopping centres and a portfolio of 10 Homemaker City centres with a value of over $5 billion.
"Highpoint is a perfect fit with our strategy in this sector, located in a trade area with strong forecast growth and excellent future expansion potential,” GPT’s chief executive Nic Lyons said.
The purchase was welcomed by property analysts.
Property Investment Research’s head of listed securities Paul Pavlidis said the purchase is more inline with GPT’s original strategy of owning retails assets.
“The purchase price was more than what we expected, and it can be viewed that GPT paid a little too much for Highpoint, but the transaction does include the management rights to the centre.
“The yield of 5.5% is pretty reasonable and it is a low risk purchase. The only concern we have is the outlook on interest rates.
“If interest rates rise in the next three years, the market might view this purchase differently,” he added.
Highpoint is located in Maribyrnong, 8 kilometres northwest of the Melbourne CBD.
Highpoint is the third largest retail centre in Australia, behind Gandel’s Chadstone Shopping Centre and Sydney’s Warringah Mall.
The centre includes approximately 400 specialties and is anchored by Myer, Big W, Target, Harris Scarfe, Toys R Us, Safeway, Rebel Sport, Borders, Best & Less and a 17-screen Hoyts cinema.
A recent extension added 60 stores including a convenience precinct, and large format and lifestyle retailers taking the total GLA to 126,000 sqm. The centre also has growth potential to expand by a further 30,000 sqm of GLA.
In addition, the centre has parking for 6,200 cars and generates traffic of 15.6 million customer visits per annum.
Highpoint is ranked sixth across Australia in terms of total MAT, with $654 million in sales, according to the Shopping Centre News "Big Guns", February 2006.
"It is extremely encouraging to see that GPT and my family share a view on the outstanding potential that exists at Highpoint. Highpoint is one of the great retail shopping centres in Australia and together with GPT, development and growth opportunities for the centre will be even further enhanced,” Daniel Besen said.
"The recent expansion of the centre, coupled with the opportunity for further organic growth as a result of the strong trade area and potential for future development, provide a very strong outlook for the centre and will contribute to strong investment returns," GPT’s head of retail Mark Fookes said.
"With significant scale in the Australian retail market, we believe that we can create operating efficiencies and provide the benefit of specialist resources which we are able to leverage across our existing portfolio of shopping centres and Homemaker City centres," Fookes said.
GPT has the capacity to fund the acquisition, which will be neutral in terms of GPT’s current distribution forecasts, through existing debt facilities.
By Nelson Yap
