South Korean pension fund set to acquire GPT's half of Erina Fair mall for $400 million

GPT looks to have found a buyer for its half share in the Erina Fair shopping centre on the Central Coast.

National Pension Service of South Korea has been named by both The Australian and Australian Financial Review as the likely buyer, though this has not yet been confirmed by ASX-listed GPT.

The shopping centre and commercial property landlord and manager was seek around $400 million for its half share in the 113,700-square-metre centre, which was valued at $392.9 million as of June last year and is the largest mall on the Central Coast.

The cash injection might help fund a higher offer for Australand – with negotiations between Australand and GPT set to resume.

GPT co-owns the mall with Lend Lease’s Australian Prime Property Fund Retail (APPRF). Lend Lease is the manager of the mall.

The sale is being handled by Simon Rooney of Jones Lang LaSalle.

It paid in excess of $80 million to acquire its half share of the mall in June 1992 from the Capita Statutory Fund and has been refurbished twice – in 2003 and 2009.

It reportedly put up its half-share for sale in February, though it has not publicly stated its intention to sell the mall.

However, in June last year, GPT revealed plans to “reweight the retail portfolio to 50% and increase the weighting in office and logistics & business parks to 35% and 15% respectively".

GPT sold stakes in two Brisbane Homemaker centres – bulky good stores – at Jindalee and Aspley in January for $91.7 million and has also sold half-stakes in malls in Canberra and Darwin.

The Korean pension fund investment is part of a wave Asian institutions buying up Australian malls, hotels and office spaces, including Singapore-based investment house Bright Ruby and Chinese conglomerate HNA Group, which paid $117 million for 1 York Street from Colonial First State in 2011 in the Sydney CBD.

Recent smaller deals include a Gold Coast-based Singaporean investor buying the Harbour Town shopping centre at Biggera Waters for $10.3m in a deal negotiated by Colliers International.

In its latest retail market update, Jones Lang LaSalle’s head of retail Tony Doherty painted a mixed picture for the sector.

“While there has been a modest recovery in underlying retail spending, and some reasonably positive signs for the short term outlook, market rents continue to remain under downward pressure,” he said.

He also highlighted a growing trend of capital partnering to unlock funds for future development following Coles and property superannuation fund ISPT announced a joint venture transaction, involving the sale of a 75%t interest in an initial portfolio of 19 Coles-owned shopping centres across Australia valued at $532 million, delivering proceeds to Wesfarmers of approximately $400 million.

The portfolio included 18 neighbourhood shopping centres and one sub-regional.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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