AMP Life offers $300m worth of top retail landlord

The AMP Capital-run fund has an interest in Sydney’s Macquarie Centre
The AMP Capital-run fund has an interest in Sydney’s Macquarie Centre

The powerful AMP Life operation is offering about $300 million worth of units in one of the nation’s top retail landlords, the AMP Capital Shopping Centre Fund, for sale at a discount of about 7%.

The life company is making the offer via the separately run fund’s internal trading board, which gives investors in the wholesale property trust an opportunity to buy units.

AMP Life says it does not comment on its investment decisions, but the offer is another marker for shopping centre values, which remain under pressure from the switch to e-commerce and capital spending required to attract a new wave of service providers.

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The AMP Capital-run fund has a $4.2 billion portfolio. Key assets include an interest in Sydney’s Macquarie Centre and Westfield Warringah Mall, and Melbourne’s Westfield Southland.

Many are super-regional shopping centres that are in the top echelon of malls nationally, but even these assets are coming under the pump, particularly given the recent sale of a half stake in Westfield Marion in Adelaide at a discount.

Industry players were quick to draw a distinction between the AMP Capital-managed fund, where the units are understood to have been privately offered between parties, and vehicles disposing of shopping centres due to hefty redemptions.

These have shaken the funds world, with investors looking to redeem about $2.2bn from Lendlease’s APPF Retail, which drove the disposal of its half interest in Westfield Marion.

The stake was picked up by Singapore’s SPH REIT, aided by Moelis, at a 9% discount to co-owner Scentre Group’s December valuation, rocking the industry last month.

By contrast, the AMP Capital-managed fund did not receive any redemptions at its last redemption window in late 2017. The next redemption window is not until November 2022.

The AMP Capital fund is also broadly performing in line with the industry benchmark for wholesale shopping centre funds.

According to its latest annual accounts, AMP-related funds held large stakes in the retail property vehicle, in which investors hold about $3.5 billion worth of equity.

The AMP Life Property Fund held a 13.71% stake, the AMP Capital Diversified Property Fund had 5.33%, followed by the AMP Capital Core Property Fund with 3.32%. Other related entities held about 3%.

The 7% discount available to investors surprised people in some quarters, but is in keeping with the decline of shopping centre values and poor sentiment towards the sector, seen in the discounts at which listed retail landlords trade.

Secondary trading of fund wholesale units is common but experts in the field said there was little demand for retail assets as the sector was on the nose with investors and sentiment was poor.

Nor is trading in units of trusts unique to AMP. Earlier this year a major domestic investor sought to shift a parcel of $350 million-$400 million worth of units in the GPT Wholesale Shopping Centre Fund.

However, it only managed to move about a quarter of these units, property executives said. Industry players suggested AMP Life had been downweighting from its long-term property funds as part of its broader restructuring, and its offer was not reflective of the final value of fund units or the underling retail properties.

More markers are soon expected in the direct market. Attention is now turning to moves by AMP’s diversified property vehicle that is close to finalising the sale of all or part of the $1.2 billion Garden City Shopping Centre in Perth’s south.

Investors in the AMP Capital fund that owns the centre kicked off a process for a full or partial exit from the asset, which is based in the suburb of Booragoon and dominates a lucrative slice of the WA market, in July.

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