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The Gold Coast’s Pacific Fair shopping centre, fresh from playing a leading role this week in Australia’s biggest retail property transaction, is the focus of a new battle for ownership of the remaining minority stake controlled by Dexus Property Group (ASX: DXS).
The sale of an 80 per cent stake in Pacific Fair - a $2.2 billion deal that included a half share of Macquarie Centre in NSW - has put the spotlight on the race to secure the 20 per cent share inherited by Dexus following the merger of the Dexus Wholesale Property Fund with the AMP Capital Diversified Property Fund (ADPF).
While Dexus declines to comment on the sale process, a spokesman tells Business News Australia that it is progressing with ‘strong interest’.
The ADPF holding is being offered through an expressions of interest campaign as Dexus moves to cash in some of the major assets within the fund.
Pacific Fair is owned by two investment funds, namely AMP Capital Retail Trust (ACRT) and ADPF.
Cbus Property and UniSuper have partnered to join AMP Capital in ACRT as owners of Pacific Fair and Macquarie Centre in the $2.2 billion deal announced this week.
They bought out all the units owned by the Canada Pension Plan Investment Board and Harina Company Limited, a wholly owned subsidiary of the Abu Dhabi Investment Authority – both of which have been investors in ACRT since 2012.
Dexus is undertaking its own sale process for the minority stake which it has valued at $335.9 million. It’s unclear if Cbus Property and UniSuper are keen to take full control of Pacific Fair by participating in the sale process for the minority interest.
The expressions of interest campaign closed last week and the offers are currently being assessed.
This week’s announcement of the Pacific Fair sale underscores the appeal of prime retail assets despite the challenges faced by retail centres through the pandemic, including a surge in online sales.
AMP has declined to reveal the yield at which the $2.2 billion sale was struck. It also hasn’t provided a breakdown in the sale price of each centre, so it is unclear how much Dexus could expect to receive for its share of asset in relation to its book value.
With about 150,000sqm of net lettable area, Pacific Fair is Australia’s fifth-largest shopping centre with more than $890 million in moving annual turnover. The property was boosted by a $670 million expansion in 2016.
UniSuper’s head of property and infrastructure, Kent Robbins, says the fund is confident of an improved performance from its newly acquired asset.
“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,” he says.
“We look forward to our partnership with Cbus Property and AMP Capital to maximise the potential of the assets, including the mixed-use development opportunities for both centres, to deliver greater retirement outcomes for our members.”
Kylie O’Connor, AMP Capital’s head of real estate, is also confident of unlocking value for both Pacific Fair and Macquarie Centre.
“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,” says O’Connor.
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