Earlier this year, one of the most remarkable corporate separations occurred as Westfield, the world's most well-known shopping mall owner split into two separate companies.One of those companies, the Scentre Group, which owns malls and shopping centers in Australia and New Zealand has come bursting out of the gate as an entity, closing on the sale of some New Zealand malls that were on the market for a while prior to Westfield separating into two entities.
Singapore's GIC is the Purchaser, GIC of Singapore is an investment fund that has made quite a few real estate acquisitions in Southeast Asia and Australia as a sovereign fund. For the asking price of around $750 million dollars US, they end up owning 49 percent of 5 malls throughout New Zealand. The malls that they bought into are: Westfield Albany, Westfield Manukau, Westfield Newmarket, Westfield Riccarton and Westfield St Lukes.
Of course the sale is still subject to approval by the New Zealand government and there are some detractors that would like to see the deal put down, but it appears that GIC and Scentre are going to successfully continue to build upon the regional relationship that they had when Scentre was still part of Westfield. The two have shared joint ownership of two Australian malls for the past seven years: Westfield Parramatta and Westfield Whitford City. And with lease rates that average 99.6% among the five New Zealand malls that GIC is purchasing, they should have no complaints about the revenues coming in going forward. The malls currently house a total of 838 different retailers, including discount stores like Target and Kmart and specialty stores. The purchase itself is at a four percent premium to the overall book value of the New Zealand malls.
Good Timing for Scentre Group:
As a new entity, Scentre Group has inherited a lot of real estate along with a mandate to grow and provide strong returns for their investors. Peter Allen, CEO of Scentre Group, said “A strategic focus of Scentre Group is the introduction of joint venture partners into some of our wholly owned assets, with the capital proceeds available for redeployment into our development pipeline and the repayment of debt." When this deal closes, it will allow Scentre Group to use the money to pay down debt in New Zealand and prepare for growth.