Fund flags $800m buying spree for shopping centres in Australia and UK Turi Condon,Property editor | September 02, 2009
Article from: The Australian
THE $58 billion Future Fund is believed to have given board approval to aggressively bid on shopping centres in Australia and Britain to the tune of $800 million.
Sources close to the transactions said the Future Fund had reactivated an offer to buy a stake in the Bullring shopping centre in Birmingham.
In January, The Times reported that developer British Land was negotiating to sell its 33per cent stake to the Future Fund for pound stg. 200m ($387m); however, a deal was not struck at the time.
British property values have crashed by about 40 per cent over the past year, while Australian values have fallen about 25 per cent. However, markets are beginning to stabilise and big investors, such as German funds, have poured into the London commercial market.
The Future Fund was concerned it might miss opportunities to buy at the bottom of the real estate cycle, the source said.
The fund, which was established by the federal government to meet the cost of public sector superannuation, added $2.37bn to its cash kitty last month by selling a third of its holding in Telstra.
The Future Fund is also the frontrunner to buy the $450m-plus Lakeside Joondalup shopping centre in Perth, which is owned by the unlisted ING Retail Property Fund. The centre had been valued at $490m in June.
It has been bidding on the Joondalup centre in partnership with Lend Lease's unlisted Australian Prime Property Fund and, if completed, it would be one of the biggest shopping centre sales in the country. The deal may be even bigger, with sources saying the Future Fund may be looking at the entire ING retail fund.
ING Retail owns 15 properties -- seven shopping centres, five outlet and three homemaker centres in Australia and New Zealand. Along with the Joondalup centre, the fund owns Habour Town outlet centres on the Gold Coast and Perth and a shopping centre in Geelong, Victoria.
Last month, The Australian reported that the fund had sold its Wynnum Plaza in Brisbane for $80m to a private investor, believed to be the Brisbane-based Lin family. It has also sold Endeavour Hills Shopping Centre in Victoria.
Analysts have questioned whether ING would try to sell out of its $10bn Australian property funds management business following poor profit results.
But yesterday, the Dutch bank appointed former Stockland head of residential development, Denis Hickey, as its new chief executive of real estate division.
British Land put its interest in the Bullring on the market in April last year for pound stg. 300m and has been selling other assets as values crashed in the wake of the global financial crisis.
The Future Fund's board had given approval to restart negotiations for the Bullring stake, according to industry sources.
The Birmingham centre includes Selfridges, Debenham and 160 speciality stores.
The Future Fund could not be reached for comment yesterday, while ING declined to comment on any commercial negotiations.
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