AMP opens cheque book for a spend-up

Stephen Costley, who this month forked out $31 million for a blocking stake in Capital Properties, has his chequebook open for more deals.

But next time, he hopes to buy property rather than shares.

Back from many years in Australia, Costley has only just begun running one of AMP's largest real estate ventures, the unlisted $543 million AMP Property Portfolio, and already wants to expand it.

"I want to buy in all the sectors," said Costley, whose portfolio is heavily weighted towards large-format retail centres. "We hope to grow the fund and diversify the income stream by buying more property."

Costley paid a premium $1.35 a share for his 10 per cent stake in Capital, a deal widely regarded as a blocking tactic to Capital's cornerstone investor, Kiwi Income Property Trust, which last year paid just $1.15 for its 19.9 per cent stake. Costley's move could stop Kiwi from getting 90 per cent of Capital, which would allow it to mount a takeover.

But Costley is keeping quiet about his real motives. Refusing to say whether he will back Capital's controversial move to sell its internal management, Costley will only say the fund bought the Capital shares on behalf of the portfolio and succeeded in getting the stake it wanted.

Costley left here in 1989 but his AMP appointment was announced on September 22.

Costley has 18 years of experience in the management of investment property here and in Australia and was head of listed property for AMP Capital Investors in Australia and the trust manager of the AMP Shopping Centre Trust, a retail sector-specific investment trust based in Sydney.

He said the AMP Capital Investors' strength drew him back, combined with the chance to be involved in one of the country's best property investment funds.

"The opportunity to work for New Zealand's largest fund manager and the INFINZ Fund Manager of the Year was too good to turn down," he said.

The fund started in 1992 and boasts of delivering an annual return of more than 9 per cent in the past nine years. Its total gross return net of fees at September last year was 17.2 per cent, 12.4 per cent over three years and 9.3 per cent over nine years.

The fund brags that its returns are high because it has a spread of real estate throughout sectors, a geographical spread, a good range of tenants in different businesses and a variety of building sizes, types and values.

The fund has 244,550sq m of property. Consultants Jones Lang LaSalle manage the industrial and office property and AMP Retail looks after the shopping centre portfolio. Costley has overall strategic and operational responsibilities for the fund.

It is one of the country's larger landlords. In Auckland, it owns the $29.5 million Gosling Chapman Tower on Shortland St, the $52 million Tower Centre on Queen St, the $12.8 million Baycorp Advantage House on Hopetoun St and the $8.3 million Sovereign House at Takapuna.

In Wellington, it has the $16 million Gen-i Tower, $19 million Telecom@Jervois Quay and $42 million PricewaterhouseCoopers Tower and Capital on the Quay building.

The fund has about $60 million of industrial property in Mt Wellington, Newton, Manukau and Christchurch.

Botany Town Centre, Lynnmall Shopping Centre and Manukau Supa Centa are half-owned by the AMP Property Portfolio and half by one of Australia's largest property vehicles, Stockland Trust. But AMP owns all the Northwood Supa Centa in Christchurch.

Costley said some of the opportunities to expand the fund were already within his reach - an $8 million development site at the Manukau Supa Centa and a $2.4 million site at the Northwood Supa Centa being earmarked for development.

Who runs what

AMP owns property worth more than $1.6 billion, mainly in the highest-yielding stellar sectors of industrial, commercial and bulk retail, seen as the best performers. The entities that control those assets here are: AMP NZ Office Trust with assets of $773 million, specialises in office towers such as the ANZ Centre on Auckland's Albert St, PricewaterhouseCoopers Tower on the waterfront and the State Insurance Tower in Wellington. NZX-listed and trading at $1.04 a unit, the trust is headed by Rob Lang in Wellington. Formerly managed by AMP Ronin Management, it is now managed by AMP Multiplex Management and is open to retail investors.

Property for Industry, NZX-listed and trading at $1.08 a share, it claims to be the only listed property investment company focused solely on industrial property. However, the listed and fast-growing Macquarie Goodman Property Trust specialises in the same sector. PFI started in 1994 and has 51 properties worth more than $245 million. It is headed by Ross Blackmore at the PricewaterhouseCoopers Tower in Auckland. Managed by AMP Capital Investors (NZ), it is open to retail investors.

The unlisted fast-growing wholesale AMP Property Portfolio, owning real estate worth $543 million, wants to buy more industrial and office properties. It is headed by Stephen Costley from the PricewaterhouseCoopers Tower in Auckland and managed by AMP Capital Investors. It is not open to retail investors. Superannuation fund managers and institutions buy into this vehicle, often spending many millions of dollars at any one time.

AMP Property Opportunity Fund, a high-return fund, is not NZX-listed and only available to wholesale and institutional investors. Little public information is available.