Centro enhances direct property funds
The Centro Properties Group has boosted the investment opportunities provided by its Direct Property Fund (DPF) and its Direct Property Fund International (DPFI) as a result of the two funds finalising their investment in the Centro Retail Investment Trust (CRIT).
The investment gives the funds a combined 46.3 per cent stake in the Centro Retail Trust (CRT).
Centro manager direct property funds Alan Hayden said: “The investment is really through quite an innovative interposed trust which really converts the investment into effectively an unlisted direct property investment.
“Through this interposed vehicle it really splits the retail trust into domestic and international pools such that the domestic fund only gets exposure to domestic assets and the international fund to the international assets,” he added.
The transaction saw the DFP and the DFPI invest $230 million and $720 million into the CRIT respectively. The amounts invested were determined by the asset split between domestic and international shopping centres of the CRIT and the acquisitions were made at the current net asset backing for each pool.
According to Hayden, the transaction has already increased the distribution yield of the DPFI to 7.3 per cent.
“The transaction has enabled the funds to continue to grow, being open-ended funds, and allows us to take capital from external investors knowing that we’ve effectively secured a large quality pipeline of product to match against those inflows,” Hayden explained.
The investments by the DFP and the DFPI operate along similar lines of a long-term syndicate investment.
Each fund can dispose of the assets after seven years or upon certain trigger events.
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