Pac and Mac $2.2b mega-deal is boost for major malls
Super fund giants UniSuper and Cbus Property have partnered with AMP Capital to take majority ownership of Pacific Fair on the Gold Coast and a half stake in Sydney’s Macquarie Centre in a $2.2 billion deal, the biggest direct retail property transaction yet in Australia.
The mega-deal adds considerable ballast and a note of confidence to AMP Capital’s real estate platform as it moves toward a proposed demerger next year that is slated to spin off into a private markets entity, combined with its infrastructure business.
Already noteworthy for its sheer size – it is the largest such deal globally in the last three years – the transaction is significant because it establishes clear benchmarks on pricing for major malls in a sector which has endured 18 months of disruption, both from the COVID-19 shutdowns and the growing threat of e-commerce.
“This deal demonstrates the returning confidence investors have in the retail sector, particularly for high quality, well managed assets, and the support for our highly regarded and talented management platform,” AMP Capital’s Head of Real Estate, Kylie O’Connor, said.
“As we move closer to operating under the demerged Private Markets business, we look forward to working with our partners to unlock future opportunities at each asset, both of which are in prime locations
within exceptional trade areas.”
“This includes further strengthening performance with innovative retail
solutions and capitalising on their mixed-use potential, including Macquarie Centre’s mixed-use DA.”
The yield on the Macquarie Centre stake comes in at around 4.5 per cent, while the Pacific Fair stake, of 80 per cent, was struck on a yield of around 4.75 per cent.
The mall investments will be held in the AMP Capital Retail Trust, in which it is expected the two industry funds will hold larger positions alongside AMP Capital’s own balance sheet capital.
“We anticipate an increase in returns from certain shopping
centres as retailers seek exposure to dominant shopping centres, such as Macquarie Centre and Pacific Fair, to leverage their omni-channel retail plans,” UniSuper’s Head of Property and Infrastructure, Kent Robbins, said.
Cbus Property’s chief executive, Adrian Pozzo, noted the potential for further growth at the two shopping malls.
The three investors take out positions in the unlisted trust previously held by Abu Dhabi Investment Authority, the Canada Pension Plan Investment Board and AMP Life Property Fund.
Wrangling the series of related transactions were AMP Capital, along with the vendors’ advisors: Colliers’ head of retail investment services, Lachlan MacGillivray, as well as Morgan Stanley’s chairman of investment banking in Australia, Tim Church and its head of real estate,
in Australia, Craig Smith.
Also in the tent, advising the buying consortium, were global law firm Norton Rose Fulbright’s head of corporate M&A, Bryan Pointon, and head of real estate, Michael French. King & Wood Mallesons acted as legal advisors for the sellers.
Adding a twist to the story, there may yet be more transaction activity to come for the two prominent shopping centres, given separately held, minority stakes in both assets were already in the market, being offered by the Dexus Wholesale Property Fund.
Those stakes – a 20 per cent interest in Gold Coast mall and 25 per cent position in Macquarie – had been held in a $5 billion AMP Capital-managed fund whose wholesale investors in April voted to merge the vehicle in a Dexus-run fund. Bids were lodged last week for the two direct stakes, worth a combined $700 million potentially.
AMP Capital remains the manager of each mall and as a co-investor the AMP Capital Retail Trust would normally have a pre-emptive right to acquire the two direct stakes now in the market.
Article: Australian Financial Review