Australians snap up $121.5m mall stake

Bayfair is in an area of rapidly rising population.

A half share in one of the country's largest shopping malls has been sold to a fund run by Australia's AMP Capital Investors for $121.5 million.

In a further sign of Australians' appetite for local blue chip real estate, AMP now wants to spend a further A$250 million in New Zealand and is hunting for Auckland and Wellington office blocks.

Tower Asset Management sold the half stake in its Bayfair Shopping Centre at Mt Maunganui, drawing international interest in one of the few regional shopping centres to be publicly marketed in New Zealand in the last 10 years.

Tower's head of property investment, Greg Whitten, said the mall's success and need for expansion capital meant his fund was too heavily weighted to one asset. Bayfair made up 55 per cent of the property fund's value.

The mall is the largest in the region, drawing more than 5.5 million visitors a year, or 15,000 a day.

Colliers International agent Bill Leckie said 13 parties bid for Bayfair. It generates $11.9 million net annual rent, so the sale was at a yield of about 5 per cent. Bidders are understood to have included Kiwi Income Property Trust, Centro, Westfield and British mall owners. The Overseas Investment Office is yet to approve the sale.

AMP bought the Bayfair stake for its AMP Shopping Centre Fund, which has also secured management rights to the mall, which turns over more than $186 million annually.

Conrad Sinclair, fund manager for the AMP Shopping Centre Fund, said Bayfair was attractive because it was in an area of high population growth. The surrounding area is predicted to expand by a further 50 per cent in the next 20 years.

Sinclair said the plan was to build more shops in the medium term.

Tony Hildyard, Tower Asset Management's chief executive, said the sale would benefit investors, and the best deal had been chosen.

The AMP Shopping Centre Fund has property worth A$1.4 billion and the Bayfair purchase is its first move out of Australia. Last week, the fund bought a northern Perth shopping centre for A$78 million.

Andrew Bird, AMP's head of property, said from Perth yesterday that the Bayfair bid was around $2 million above what competing mall owners offered Tower. Now, he wants to buy Auckland and Wellington office blocks for his A$1.6 billion commercial fund. Blocks going for $50 million-plus were of interest and he was prepared to spend up to A$250 million in New Zealand. The difficulty was getting commercial properties at the right price.

Large Australian funds have huge stakes in New Zealand commercial, industrial and retail property. The weight of capital being invested in Australian superannuation funds is driving competition for real estate in this country.

Leckie said Australian institutions had bought about $4 billion of New Zealand property in the last few years.


Bayfair Shopping Centre

* A 7.7ha property outside Tauranga with expansion potential.
* Mall has 100 shops occupying 31,000sq m and 1643 car parks.
* Anchor tenants are Woolworths, Farmers, Kmart and Countdown.
* Developed two decades ago but expanded in stages since.
* Won the Property Council's supreme award three years ago.