Mall owner may float or sell
Kiwi retail assets are attracting global attention, increasing the likelihood that Scentre Group will either sell or float a half share in its New Zealand shopping malls.
Scentre, an Australasian spin-off of retail giant Westfield Group, is considered to be the country's leading shopping centre owner, with nine malls worth an estimated $2.9 billion.
However, the new company is reportedly keen to pay down debt.
The Australian newspaper yesterday reported UBS was understood to be working on plans for a half stake in the New Zealand portfolio to be floated on the NZX.
Such a stake would be worth about $1 billion, the paper suggested.
It also claimed Scentre had been talking with two possible buyers of the half-stake: Canadian pension fund PSP Investments and the Government Investment Corporation of Singapore.
In either case, Scentre is believed to want to hold on to the management contract and to retain a holding in the high-yielding New Zealand malls.
UBS has yet to comment, but ASX-listed Scentre chose its words carefully.
In a statement yesterday, it said that the group's strategy included bringing "joint venture partners into some of its wholly-owned assets".
"Should this strategy result in new transactions for the group, Scentre Group will advise the market."
Should Scentre decide to sell its properties, it will do so at a good time.
Recently PSP bought 18 retail or building assets from AMP Capital Property Portfolio for more than $1 billion.
If the deal gets Overseas Investment Office approval, AMP will retain the management rights and PSP will own assets like Botany town Centre, Wellington's PricewaterhouseCoopers Tower and its adjoining retail space, Capital on the Quay.
PSP also bought a 30 per cent stake in the Kaiangaroa forest in late 2012.
Stephen Costley, general manager of AMP Capital Property Portfolio, said he only knew what he had read about the Scentre story, but New Zealand real estate was turning the heads of "sophisticated global investors".
"There is a lot of money in the world looking for good assets and it may be more of a matter that New Zealand is on the radar and investors are looking to New Zealand and seeing what is available."
Costley said New Zealand could be flavour of the month for a number of reasons, including pricing in other countries and the size of the deals.
"For example, the PSP transaction is a significant transaction. Similarly, if there are other portfolios that people can access, that gives them scale in that marketplace."
Kiwi Income Property Trust recently said that it was ‘'always interested" in new offers but declined to say any more about the Scentre rumours.
NZ'S BIG SHOPPING CENTRE LANDLORDS
Scentre: Nine shopping malls including St Lukes in Auckland, Queensgate in Wellington, and Riccarton Mall in Christchurch.
Kiwi Income Property Trust: Six centres including Auckland's Sylvia Park, Hamilton's Centre Place and Porirua's North City.
AMP Capital: The Palms, Christchurch, and a half-stake in Tauranga's Bayfield mall
DNZ: Developer of Auckland's Westgate centre, owner of Wellington's Johnsonville Mall
Fisher Funds: Half stake in Bayfield, Merivale Mall in Christchurch