This article is from the Australian Property Journal archive
POWERHOUSE Industry Superannuation Property Trust has bought its second shopping centre for the year, buying a 50% stake in the Myer Centre Brisbane from CFS Retail Property Trust for $366 million on 6.5% yield.
At the same time CFX also announced an on-market unit buy-back for up to $150 million of units.
The sale is part of CFX’s strategy to offload major CBD shopping centres.
“The sale of a partial interest releases capital from an asset where we have realised significant value, but allows us to retain a continuing interest to maintain the breadth of our tenant relationships and portfolio diversification,” CFX fund manager Michael Gorman said.
The sale price is relative to the 30 November 2011 independent valuation of $732 million for a 100% interest.
“To maximise returns for investors, we will continue to investigate the sale of 100% interests in smaller non-core assets and half-interests in some of our wholly-owned shopping centres.
“Subject to rigorous assessment of available investment opportunities, the proceeds from these transactions may be reinvested into accretive development projects, utilised to purchase interests in other regional malls or for other capital management initiatives,” he added.
Godman said surplus capital provided by the Myer Centre Brisbane transaction will be used towards an on-market buy-back of CFX units. If further surplus capital becomes available in the next 12 months, additional units may be acquired under the buy-back for up to 5% of issued capital in total.
“The on-market unit buy-back clearly demonstrates our active approach to capital management, whilst also delivering on our strategy to enhance unitholder returns. We will only purchase CFX units where it is accretive to earnings and to Net Tangible Asset Backing per unit, and where Management considers that the proposed buy-back is the optimum deployment of capital,” Gorman said.
The Myer Centre Brisbane is a six-level CBD regional shopping centre located in the heart of Brisbane, above the city’s bus interchange. CFX acquired a 100% interest in the shopping centre in 1988 for $369 million. Providing 63,700 sqm of space, The Myer Centre Brisbane houses Myer, Target, Coles Central, an eight-screen Event cinema complex and over 180 retail specialty stores.
This is ISPT second shopping centre buy for the year and comes hot on the heels of the purchase of Perth City Central from Centro for $57 million in January.
Jones Lang LaSalle’s head of retail investments Simon Rooney, who brokered the deal on behalf of CFX, said retail transaction volumes totalled $3.2 billion in 2011 with a further $537.8 million recorded so far in 2012.
“The Myer Centre Brisbane is the largest retail transaction since Lend Lease’s APPF Retail acquired a 50% interest in Cairns Central ($261 million) from Westfield Group in October 2011. It is also the largest retail agency transaction since the 50% sale of Northland Shopping Centre ($455 million) to CPPIB in May 2011
“This significant sale is another example of large A-REIT’s, recycling capital and retaining management by selling down part or whole shares in core regional assets at book value or a premium to book value.
“What it also demonstrates is that institutional investors view the current period as a window of opportunity to secure strategic exposure to the dominant, core regional shopping centre market that traditionally is rarely traded.
“As a result of this success, we expect other major owners will be keen to pursue this strategy of ‘capital recycling’ in order to fund expansions, refurbishments and/or to retire debt.” Rooney concluded.
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