Commercial & Industrial Property News Update

Australia - Wesfarmers Seeks AUD 700 million Co-investment

October 17, 2012

The second-largest retailer in Australia is seeking co-investors for about 25 malls at a total value of AUD 700 million.

Wesfarmers Ltd is following the footsteps of other major property companies, seeking to establish partnerships with institutional investors so as to free up working capital.

Australia's second-largest retailer is looking for partners to co-invest in its 25 shopping centres held by its Coles unit, worth an estimated total of AUD 700 million.

Simon Rooney of Jones Lang LaSalle (JLL) - which is advising Wesfarmers - said that the Perth-based company hopes to finalise its real estate strategy by 2012.

Partnering with investors so as to free up capital for developments and new ventures is a strategy that has recently became popular among property owners. Westfield Group, Centro Retail Australia and Goodman Group were seen to partner with investors including the Canada Pension Plan Investment Board and the Industry Superannuation Property Trust.

Woolworths Ltd announced this month plans to inject 69 stores and shopping centres into an A-REIT valued at AUD 1.41 billion, with existing investors offered shares in the new trust.

However, Wesfarmers said that unlike Woolworths, it would not create a separate entity, preferring instead to retain "a degree of control, which will give them the flexibility to develop the assets further in the future and or embark on refurbishments or expansions," said Rooney.

It is understood that Wesfarmers has enlisted investment banks Goldman Sachs Group Inc. and the Royal Bank of Scotland Group Plc to advise the company.

Wesfarmers reported an 11% increase in profit in the year ended June after price cuts, store relocations and increases in staff numbers at Coles supermarkets boosted sales. Its shares have climbed 18% this year, compared with a 11% gain in the benchmark S&P/ASX 200 index.

Tags: Commercial real estate, Shop for rent, Income properties

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