Published: 14 May 2005
Grant Samuel’s independent assessment of the proposed General Property Trust restructure package is relevant well beyond the interests of those directly involved.
And Lend Lease Corp’s document setting out its opposition to the GPT package is equally instructive in terms of:
prospects for some of Australia’s biggest retail property players
prospects from investing elsewhere in the world, and
what listed property trust investors are sold & how they’re sold it.
This article is split into 3 pages:
this opening page, covering some general issues
considerable comment from Grant Samuel on the GPT proposal, and
a damning critique from Lend Lease.
After staving off a “merger” offer last year from its manager, Lend Lease, GPT was then subjected to an underpriced takeover bid from Stockland Property Group, which failed miserably.
Now GPT is trying to enter a new path of its own choosing – internalising management, selling off 3 assets to Westfield Group for $A744 million and entering a $A1 billion European investment joint venture with Babcock & Brown.
Westfield owns 6.5% of GPT, which it will be allowed to vote and which could be crucial to success at the 2 June meeting on the internalisation proposal. Lend Lease belatedly came up with a proposal to stymie the transaction, which would see it lose a significant management contract. It wants the Westfield and Babcock & Brown parts of the deal dropped, alleging they’d be bad for GPT unitholders, yet is prepared to go along with internalisation.
The switch from an external management contract (which was all the rage not so long ago) to internal management (now it’s fashionable again) will be done by stapling the investment in the trust with investment in GPT Management Holdings Ltd. In last year’s Lend Lease merger proposal; the securities of Lend Lease & GPT would have been stapled, with the management of both owned through the investment in Lend Lease.
Stapling gives investors a say in who’s on the board and an overview of management, 2 things which investors in New Zealand listed property trusts don’t have.
GPT’s latest manoeuvre throws up features â€“ good, bad, debatable â€“ worth examining, because what Australian property trusts do affects New Zealand investors, whose investment futures are increasingly determined from Sydney or Melbourne.
Australians on the NZ scene
The New Zealand listed property scene is now dominated by Australian owners â€“ Commonwealth Bank (Kiwi Income), ING (Dutch investment bank ING’s Australian office, in partnership with ANZ Bank, currently merging ING & Urbus), Macquarie Goodman, Multiplex. AMP’s New Zealand branch is involved in the AMP NZ Office Trust & Property For Industry Ltd, but Multiplex is its partner in the office trust manager and Stockland Property Group owns a chunk of property (including the Botany Town Centre) in partnership with AMP Capital Investors NZ Ltd.
Centro Property Group, a Melbourne-based listed group with large syndication interests in Australia & the US, has its own New Zealand property network. It incorporated Centro NZ Shopping Centre Fund Ltd, Centro Property Manager (NZ) Ltd & Centro Fund Manager (NZ) Ltd on 1 March, after establishing CPT Custodian Pty Ltd & CPT Manager Ltd in February 2004.
Westfield Group, New Zealand’s biggest mall owner, is a player in the GPT proposal, as an investor able to vote on the proposal and also as the buyer of 3 major shopping centre assets â€“ plus management contracts – if the proposal proceeds. Lend Lease says the sale of those assets will diminish GPT’s returns and its ability to perform in the retail sector in the longer term.
Lend Lease, which retrenched around the world after some investment disasters, particularly in the US, has much less of a presence in New Zealand now than the one it built up through construction company Civil & Civic NZ Ltd and later through Bovis Lend Lease Pty Ltd.
This group of stories:
11 May 2005: Lend Lease tells GPT unitholders to vote no
10 May 2005: GPT split from Lend Lease gets nasty
22 March 2005: GPT’s European investment venture outlined
4 March 2005: Stockland still under 1% of GPT as bid closes
Websites: GPT internalisation proposal
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