This article is from the Australian Property Journal archive
GPT confirmed it would like to have full control of Highpoint shopping centre and the opportunity has finally arrived after waiting for over a decade.
The Besen family’s Highpoint Property Group is selling the remaining 25% interest in the prized shopping centre in Melbourne’s western suburbs.
HPG is currently one of three owners of the centre, along with GPT Group (16.67%) and the GPT Wholesale Shopping Centre Fund (58.33%).
GPT and GWSCF recently valued their interests at $383.2 million and $1.341.1 billion respectively at a cap rate of 4.75% as at December 31 2016.
HPG’s remaining 25% interest could sell for more than $500 million as well as set a new yield benchmark for a super regional centre.
GPT has the capacity to fund the purchase because it has a current liquidity of $800 million and modest gearing of 24%.
The GPT told Australian Property Journal that the property giant is keen to secure the remaining stake in the centre.
GPT also confirmed that it has first rights over the 25% interest.
“The GPT Wholesale Shopping Centre Fund and GPT have pre-emptive rights to purchase the Besen’s share in Highpoint Shopping Centre.
“The stake is yet to be offered to the co-owners, however, Highpoint is a key asset for the Fund and GPT, and both would be keen to increase their interest in the asset, subject to the sale terms.” A GPT spokesperson told Australian Property Journal.
Completed in 1975, Highpoint currently comprises a GLA of 154,000 sqm and 7,341 car parking spaces. The centre boasts 474 tenancies with an occupancy rate of 99.9%. It is anchored by a Myer (19,120 sqm) and David Jones (14,000 sqm) department stores, along with Target (9,920 sqm); Hoyts (9,030 sqm); Big W (8,160 sqm and Woolworths supermarket (4,240 sqm). The centre also boasts international brands such as Zara, Topshop, Apple and Samsung.
The annual centre turnover was $991.4 million as at December 31 2016, with total centre sales turnover per sqm of $6,935 per sqm and specialty retail sales turnover of $10,771 per sqm.
The sale will end the Besen family’s partnership with GPT at Highpoint after more than 10 years. GWSCF bought a 50% interest in the centre in March 2006 for $621.2 million. In 2009, the family offered the fund first rights to buy a further 16.67% interest but GWSCF declined the offer and handballed it to GPT, which paid $206.3 million (excluding acquisition costs) on a cap rate of 6%. HPG sold a further stake in 2014.
HPG chairman Marc Besen said the Besen family has enjoyed strong and successful relationship with GPT over the last 10 years.
“Highpoint is a most important retail asset showcasing leading Australian and international brands. The Besen family has enjoyed a strong relationship with GPT over the last 10 years and our shared interest in Highpoint has been very successful for both owners.
“With scope for continued expansion and development under GPT’s management, we expect this asset to attract a great deal of interest from potential investors,” Besen said.
HPG has appointed Grant Samuel and Arnold Bloch Leibler as advisors. If GPT takes full ownership of the asset, it would be sitting on a gold mine because last year the Maribyrnong City Council rezoned seven precincts comprising and adjoining the Highpoint shopping centre, unlocking the potential for around 2,500 apartments and retail space worth in excess of $1 billion.
Just this week, GPT’s rival Vicinity Centres came up with an innovative way to boost revenue by selling the air rights above The Glen shopping centre to Jeff Xu’s The Golden Age Group, which plans to develop a three-tower 500-apartment project above the centre.
The sale helped reduce Vicinity’s redevelopment costs from $490 million to $460 million and improved its IRR from 6% to above 10%.
In the coming months retail property investors will be spoilt for choice following the Besen’s offering and comes just a week after private equity firm Blackstone put its $3.5 billion Australian shopping centre portfolio on market.
The 10 shopping centres include Clifford Gardens in Queensland, Forest Hill Chase and Brimbank shopping centre in Victoria; Rundle Place and 80 Grenfell St Adelaide in Adelaide; Greensborough Plaza in Melbourne; three Westfield shopping centres including Warrawong, Strathpine and Figtree and Top Ryde City in Sydney.
Australian Property Journal
