Record deal: $680m for quarter stake in Highpoint Shopping Centre
A property fund run by sector stalwart the GPT Group has made one of the most expensive shopping mall investments in Australia’s history, snapping up a 25% stake in Melbourne’s Highpoint Shopping Centre, in a $680 million purchase from the city’s wealthy Besen family.
Property players were surprised by the sharp pricing on the transaction, which comes amid a focus on the health of the retail property sector in Australia, as wage growth remains weak and Amazon prepares to roll out its full retail offer locally.
GPT’s wholesale retail property vehicle, the GPT Wholesale Shopping Centre Fund, took up its pre-emptive right to buy the holding after the billionaire family, which has a fortune founded on retail and property interests, flagged a sale in April.
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The GPT fund bought the 25% stake on a passing yield of about 4.2%, making it the most expensive purchase of an interest in a regional shopping centre in Australian retail property history on this metric. The listed property giant acted after superannuation fund-backed manager ISPT registered its interest in the stake at the same price level.
The mall has about 470 stores including Myer and David Jones and international retailers Apple, Samsung and Zara.
GPT can now pursue plans to improve Highpoint’s retail offering and explore the potential to build apartments on the site.
The sale delivered a windfall to billionaire Marc Besen, who also built up the Sussan Group. Besen developed the shopping centre in 1980, well before the family sold a 50% stake to GPT in 2006 for $621 million, and its sale of a further interest to the group in 2009.
GPT yesterday promoted the deal as giving it full control over the complex, now valued at $2.72 billion, that is held jointly by the fund it manages, and its balance sheet.
Highpoint shopping centre in Melbourne has about 470 stores.
GPT fund manager Brett Williams says the buy is an important step in delivering on strategy after the mall returned a standout 15.1% over the past 12 months.
“Super prime regional centres of this calibre are rarely traded in Australia,” Williams says. “Highpoint also presents several immediate asset enhancement opportunities including the expansion of the cinema and entertainment precinct, introduction of additional international retailers, and the development of a second supermarket and fresh food precinct.
“The centre should also benefit from mixed-use development opportunities in the future.”
The acquisition, struck at a 10% premium to the fund’s June 30 book value, means the fund now owns 83.33% of the Maribyrnong centre, which dominates Melbourne’s northwest, while GPT directly holds 16.67%.
The last major shopping centre deal to approach these metrics was struck in 2007 when Westfield sold a half-share in its flagship Melbourne redevelopment at Doncaster to US group LaSalle Investment Management.
Westfield sold that interest for $738 million on yield of 4.7% in what analysts said was a record low yield during the last property boom.
GPT did not take up an option to put the interest on its balance sheet but is aligned as its exposure to the massive shopping complex asset is 40% in total, due to its holding in the shopping centre fund.
The centre could also benefit from the area’s improving demographics and the potential for improved transport links.
Interests in major office towers, like Sydney’s $1.4 billion MLC Centre, which GPT passed up the opportunity to buy half of for about $685 million in February, have traded at yields of about 4.5%.
Stakes in major shopping centres have been held at tighter rates but they rarely change hands.
– with Elizabeth Redman
This article originally appeared on www.theaustralian.com.au/property.
