GIC global real estate boss touches down as Aveo auction gathers steam

People briefed on the plan said Goh did the rounds of potential partners and portfolio companies in Australia in late February. A visit of this kind shouldn’t set off immediate alarm bells but GIC, which oversees $US847 billion ($1.4 trillion) in assets, is now the biggest sovereign fund investor in Australia and the biggest offshore source of capital in commercial property.

While Goh was on his reconnaissance mission, Brookfield’s sell-side advisers at Barrenjoey and Morgan Stanley started taking reconfirmed non-binding indicative offers for the $3 billion-odd Aveo. GIC is running hard at the asset, according to the sell-side, and was likely to appoint Rothschild Australia to advise during the binding stage.

GIC is up against ASX-listed Charter Hall, which has a market cap of $8.16 billion and is taking its counsel from King & Wood Mallesons. Then there’s Scape Australia, advised by Macquarie Capital and Deutsche Bank. Binding offers are due in April, sources told this column.

While analysts reckon both Scape and Charter Hall will need to raise capital to fund the purchase, the former has strong backers in Dutch investors APG and Bouwinvest, and South Korea’s National Pension Service. Equally, Charter Hall CEO David Harrison has had little issue tapping Asian debt markets and local listed equities investors in the past.

Oxford Properties Group, which owns the country’s $13 billion office property platform Investa, is said to be sitting on the sidelines – for the time being – given funding constraints.

The Good Life

As Street Talk reported in August, a sale flyer in front of potential backers said Aveo comprised a 3.4 million square-metre portfolio of 10,000-plus units in 65 villages – and had more than 3000 units in its pipeline.

The flyer pitched Aveo as the “premier option” over its private-equity-owned competitors such as Infratil’s RetireAustralia, EQT’s Metlifecare and Stonepeak’s Arvida. Interested parties were told Aveo is the second-largest provider behind Lendlease’s Keyton with a 6 per cent market share.

It operates with a $1.6 million average median house price, higher than its competitors, enjoys high operating margins from 100 per cent capital gains contracts, and has a 94 per cent occupancy rate, the flyer said.