Archive | CFS Gandel

World property W11June14 – CFS active after internalising

Internalised CFS sells Entertainment Quarter, buys Queanbeyan centre, opens Emporium

The CFS Retail Property Trust Group & one of the wholesale funds it manages, CFSGAM Property Retail Fund, have conditionally sold their leasehold interest in the Entertainment Quarter in Moore Park, Sydney, to a private consortium headed by Gerry Harvey, John Singleton & Mark Carnegie’s private equity fund, Carnegie Private Opportunities Fund No1, for $A80 million.

The Entertainment Quarter is a mixed-use asset focused on retail, entertainment, leisure & office in the Centennial Park sports & leisure precinct, 3km south-east of the Sydney cbd and next to the Sydney Cricket Ground, Allianz Stadium, Fox Studios & Hordern Pavilion.

The sale is subject to the approval of the ground lessor & the relevant state government consent authority.

CFS Retail was part of Colonial First State Global Asset Management, a business unit within the Commonwealth Bank of Australia Ltd’s wealth management division, until securityholders voted on 7 March to internalise its management, which included acquiring the bank’s retail property asset management business and the relevant entities to start the investment management of a number of wholesale property funds.

The bank has also exited management of the Commonwealth Property Office Fund, selling it to Dexus Property Group.

One of the wholesale funds CFS Retail manages, the new CFSGAM Property Enhanced Retail Fund, has bought its first retail asset, the Riverside Plaza sub-regional shopping centre in Queanbeyan, the New South Wales city next to Canberra, from AMP Capital Investors Ltd for $A62.5 million on a yield of 8%.

The CFS Retail Property Trust Group owns Melbourne’s latest fashion retail magnet, the fully leased Emporium Melbourne – on the site of Myer’s Lonsdale St store in the cbd – which opened its first stage in April and is continuing to open progressively until August.

It will have 220 international & local retailers offering fashion & food on 7 levels, including 20 Melbourne flagship stores.

Link: Colonial First State Global Asset Management

Attribution: CFS

Regular leads: Europe Real Estate, Mingtiandi, Planetizen, World Property Channel

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CFS Gandel buys Melbourne centre on 7% yield

The CFS Gandel Retail Trust has bought the Forest Hill Chase shopping centre in Melbourne from The Pacific Group of Companies for $A214.5 million (plus $A8.7 million of acquisition costs) at a 7% initial yield before costs.

The trust is managed by Colonial First State Property Retail Pty Ltd, part of the Commonwealth Bank property group.

Forest Hill Chase is a 3-level sub-regional shopping centre 18km east of the Melbourne cbd. It has 56,886m² total gross lettable area & 3200 onsite parking spaces. The centre has been expanded through a number of redevelopments since its completion in 1964 and has further expansion potential.

The acquisition includes a 10-screen Hoyts cinema complex and AMF Bowling on long lease terms. Also part of the deal are a number of adjoining properties over a total 8583m², comprising 27 individual shops, a gym & 3-level office building. The total centre has a 99.6% occupancy rate.

Total centre moving annual turnover was $A251 million and specialty MAT $A64.9 million for the June 2004 year.

The acquisition will be funded by a fully underwritten $A100 million institutional placement, a unit purchase plan for retail investors & existing debt facilities. The trust will keep its gearing at the June balance date level of 26.8%.

Website: Colonial First State

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Colonial funds buy Fox Entertainment Precinct

News Corp Ltd and Lend Lease Corp Ltd have sold their Fox Entertainment Precinct in Sydney to 2 funds managed by Colonial First State (which is part of the Commonwealth Bank) for $A52.8 million.

The price, including $A3.8 million acquisition costs, was book value in March. The $A49 million net of those costs was the valuation.

The entertainment precinct is on the old Sydney Showgrounds site in Moore Park, 3.5km south-east of Sydney’s central business district, next to the Sydney Cricket Ground & Aussie Stadium, and near the Randwick racecourse.

CFS Gandel Retail Trust, managed by Colonial First State Property Retail Pty Ltd, and Direct Property Investment Fund’s retail sector, a wholesale fund which Colonial First State Property Ltd manages, have bought 50% each of the leasehold interest in the precinct on a 9.25% capitalisation rate.

The trust will fund its new purchase entirely from debt. Its current weighted average interest rate is 6.1%. The purchase price reflects a forecast 8.9% year 1 yield before costs.The trust is forecasting an 11.4% 10-year internal rate of return.

The precinct is part of the Fox Studios Australia complex launched in 1999. It has 32,920m² of retail, office & cinema space. Its 16-screen Hoyts cinema is on an 11,000m² lease running to 2019. Total moving annual turnover for the November 2003 year was $A60.8 million (excluding gst), specialty MAT $A5370/m².

The Commonwealth Property Office Fund and Gandel Retail Trust joined forces in September 2002 to buy the Colonial First State Property Trust. 3 of the 4 funds that made up the Colonial trust, containing $A1.2 billion of office, industrial & high-tech industrial office properties, were poured into the Commonwealth fund while Gandel got its $A647 million retail portfolio.

Last October, Commonwealth Bank and the CFS Gandel Retail Trust combined again, spending $A251.6 million each to buy the 49,270m² Chatswood Chase shopping centre on Sydney’s North Shore.

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Commonwealth/Gandel bid for Colonial trust wins overwhelming approval

Update 30 September 2002

Commonwalth Property Office Fund and the Gandel Retail Trust won approval by clear margins at unitholder meetings today for their takeover of 3 of the 4 funds that make up the Colonial First State Property Trust. Commonwealth/Gandel raised their offer by about A27c to $A2.46/Colonial unit after Mirvac Group waged a counter-offer campaign.

Commonwealth/Gandel heads Mirvac as Colonial unitholders prepare for Monday vote

Update 27 September 2002

Holders of Colonial First State Property Trust units meet in Sydney on Monday to decide whether to accept an in-house bid putting their assets into the Commonwealth Property Office Fund and Gandel Retail Trust, or a hostile bid from Mirvac Group. Mirvac raised its bid on Monday and Commonwealth/Gandel came back on Thursday. Mirvac’s mix, including A23.6c cash, was valued at $A2.40/unit, Commonwealth/Gandel’s A28.5c cash plus script at $A2.46/unit. My picks: Mirvac’s a more positive long-term property operator but the bank will win, Mirvac’s existing shareholders will probably be relieved at not having the pips squeezed, and property trust investors generally should use detail from this bidding war to cut the money they pay trust managers

Commonwealth/Gandel raise Colonial offer & set new meeting date

Update 17 September 2002:

Commonwealth Managed Investments Ltd, the responsible entity of the Commonwealth Property Office Fund, and Gandel Management Ltd, responsible entity of the Gandel Retail Trust, raised their offer for the Colonial First State Property Trust on Friday by A9.5c cash, making a total cash component of A25c and total offer value at 12 September prices of $A2.45, compared to the value of Mirvac Group’s bid that day of $A2.41 (or, according to Mirvac’s arithmetic, $A2.44 versus $A2.42).

Mirvac managing director Bob Hamilton commented that Commonwealth/Gandel had raised their bid from the original $A2.19/unit by $A155 million in cash for the right to charge $A8-12 million/year in fees, and that Colonial management had recommended the original offer as fair & reasonable & in the best interests of unitholders.

The revised timetable for Colonial unitholders is for a meeting in the grand ballroom of the Westin Hotel on Martin Place in Sydney at 9am on Monday 30 September. Mirvac has failed to upset the voting — the takeovers panel decided Commonwealth & Gandel could vote non-beneficially held shares.

Update 4 September 2002:

Mirvac Group increased its offer for Colonial First Property Trust today to $A2.41/unit, made up of A20c cash plus 1 Mirvac security:1.89 Colonial units, or 1 Mirvac security:1.73 Colonial units, plus 1 Mirvac option:14 Colonial units, plus a capital distribution of A0.8c/unit.

Mirvac reckons it’s offering A11c bid margin for Colonial trust

Update 3 September 2002:

Commonwealth Bank and Colonial First State Property Trust have treated the proposed sale of the trust to Commonwealth and the Gandel Retail Trust as effectively an inhouse reshuffle, just happens to be in the public eye.

Not surprisingly, Mirvac managing director took exception to the “limited scope” comparison of offers presented by Commonwealth on Friday, which put Mirvac’s somewhat in the shade.

On Monday’s closing prices, he said the Commonwealth/Gandel offer was worth $A2.336/unit, just below Mirvac’s $A2.352/unit. Throwing in some cost savings which weren’t considered in BDO Corporate Finance’s “limited scope” comparison, Mr Hamilton said the Mirvac offer would be worth $A2.45.

Commonwealth/Gandel fightback over Colonial trust

Update, 31 August 2002: Commonwealth Bank of Australia and the Gandel Retail Trust lifted their offer to Colonial First State Property Trust unitholders on Friday to a mixture valuing the offer at $A2.37/Colonial unit, up A2c on Mirvac’s bid.

The new bid includes A15.5c in cash, management changes worth about A2c/unit and a 5-year increase in distribution by Gandel Retail Management Ltd, from 28% to 35% of distributed earnings.

The management changes include cutting the base management fees from 0.60% to 0.45% of gross asset value, with a cap on performance fee so the overall fee doesn’t exceed 0.60% up to $A3.5 billion, and 0.55% above that.

Commonwealth will also waive $A2.5 million of its fee for the June 2004 year.

The original offer was said to be worth $A2.25/unit (but when Mirvac made its bid this week was worth $A2.19). The latest statement from Commonwealth & Gandel says the enhancements (A15.5c in cash plus A2c in fee improvement) add A18c to $A2.19 in units, with the potential for more from the Gandel distribution increase.

BDO Corporate Finance Pty Ltd directors Ed Psaltis & Ralph Goodman found the original Commonwealth/Gandel offer fair & reasonable, in a price range of $A2.14-2.24, and followed up their independent report with “limited scope” assessments of the subsequent offers. They put a value range of $A2.27-2.36 on Mirvac’s offer and $A2.30-2.43 on the second Commonwealth/Gandel offer, but didn’t include the impact of the reduction in management fee in the enhanced Commonwealth/Gandel bid.

The meetings to consider the Commonwealth/Gandel bid have been deferred a week, to Tuesday 10 September.

Update: Deutsche Bank increased its holding in Colonial by 1.1% on Tuesday, taking its stake (as investment manager) to 9.67%. Some of its buying was on behalf of Colonial First State Investments Ltd as responsible entity for the Commonwealth Property Fund.

Week out from unitholder meetings on Commonwealth/Gandel offer

Mirvac Ltd has lobbed a hostile bid into Commonwealth Bank of Australia’s tidying-up exercise at Colonial First State Property Trust, a week ahead of a scheduled vote on the Commonwealth/Gandel deal.

Investors are scheduled to vote on the Commonwealth/Gandel offer next Tuesday.

Commonwealth Bank announced its proposal on 30 July. It proposed acquiring all the assets of 3 Colonial trusts — an $A1.18 billion portfolio of office, industrial and high-tech industrial office properties — to combine with its Commonwealth Office Property Fund, while the Gandel Retail Property Trust would acquire Colonial’s $A647 million retail portfolio.

That proposal valued Colonial at $A2.25/unit. Mirvac’s proposal of 1 stapled security:1.76 Colonial units values the Colonial trust at $A2.35.

Mirvac said a successful bid by it would raise its earnings in 2003 by 5.6%, from A29.2c/unit to A30.8c/unit, increase its ASX200 property trust index weighting from 5.9% to 8.9%, produce $A11 million in cost savings at Colonial by internalising management (the earlier offer would see a Commonwealth management company running its fund and a combined management company running the CFS Cgandel Retail Trust), and lift Mirvac’s total assets from $A2.77 billion to $A4.65 billion.

Commonwealth increased its relevant interest in Mirvac on 16 August, from 6.94% to 8.28%.

National Australia Bank gave notice last week that, through various channels, it had increased its interest in Colonial from 5.98% to 7.23% in June. AMP Ltd became a substantial holder in Colonial on 14 August, with 5.02%.

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