Lendlease to sell $850m shopping centre asset
Lendlease’s investment arm will recoup as much as $850 million from the sale of one of its largest shopping centre assets, taking it a step closer to satisfying as much as $2 billion in redemption requests from its unlisted fund as some investors weigh up their exposure to the retail sector.
The Lendlease-managed Australian Prime Property Fund (APPF) Retail appointed agents this week to sell its 50 per cent stake of Brisbane’s Westfield Carindale, which the fund co-owns with the Scentre Group-managed Carindale Property Trust.
APPF Retail’s stake in the $1.7 billion Carindale centre is one of the biggest assets in the 10-property fund. Also in the portfolio are stakes in Lakeside Joondalup, one of the biggest malls in Western Australia, Sunshine Plaza in Maroochydore on the Sunshine Coast, and Macarthur Square in Western Sydney.
Westfield Carindale has the second-highest sales of all shopping centres in Brisbane, with annual retail sales of $896.3 million.
The planned divestment comes amid intense interest on values in a sector that has come under pressure from weaker consumer sentiment and the structural challenge of e-commerce and caused some investors to reweight their portfolios.
If the half stake of Westfield Carindale sells in line with the shopping centre’s most recent book value of $1.7 billion, on top of the $670 million recouped from November’s Westfield Marion sale in Adelaide, Lendlease would be able to repay about $1.52 billion to its investors and close in on meeting its total redemption requirements.
It’s understood that most of the requests from among the fund’s 60-odd institutional investors were to reduce their exposure rather than to exit entirely from the fund. The trust has two years to satisfy redemption requests and that window closes towards the end of this year.
Asked to confirm the planned sale, a Lendlease spokesman said the fund did not comment on market speculation.
The sale will be keenly observed by market pundits still trying to ascertain where valuations of major malls sit in the current market, after the Westfield Marion stake sold at a discount of more than 9 per cent to the property’s book value.
Those involved in the Westfield Marion deal said it underscored how offshore investors remained attracted to “fortress style” retail assets, but analysts said it showed buyers for such large malls were scarce. They predicted retail property values would decline over 2020.
Also keenly observed was AMP Capital’s divestment of a half stake in Garden City, one of Perth’s largest malls, to reduce asset concentration and provide further diversification for investors of its Diversified Property Fund.
The asset was bought by Scentre Group for $570 million, which even with the inclusion of the management and development rights, represented about a 6 per cent discount on the mall’s last officially recorded book value of $1.212 billion for the entire asset.
