Vicinity Centres sets up $1bn fund with Asian manager
Retail asset management specialist, Vicinity Centres, has established a 50:50 joint venture with Singapore’s Keppel Capital to create a new $1 billion wholesale property fund, the Vicinity Keppel Australia Retail Fund (VKF).
The fund would be expected to invest in $1 billion of retail assets which are owned by Vicinity and the transaction, if implemented, would contribute to net tangible assets per security growth of 21 per cent.
The fund would boost the firm’s strategic partnerships business to close to $12 billion of assets under management and would increase both fund and asset management fees.
Both Vicinity and Keppel said they would hold up to 10 per cent equity interest in VKF, with additional capital sourced by Keppel Capital through its extensively established investor relationships.
The fund would be marketed with a targeted financial close by the end of the first quarter in 2019 and would initially invest in a portfolio of retail assets across five Australian states.
Vicinity’s chief executive, Grant Kelley said that including the planned divestment of up to $1 billion of non-core assets, announced in June, and following the establishment of this fund, the firm would expect to have sold approximately $2 billion of assets in addition to the $2 billion of assets sold since the merger which was completed in 2015.
Also, the company would reinvest the proceeds into its development pipeline to buy back Vicinity securities.
Keppel Capital’s chief executive, Christina Tan said: “The proposed fund, which will be Keppel Capital’s first retail-focused real estate fund, will expand our track record in Australian real estate investments beyond office developments to include retail properties.”
“It will allow us to connect our investors to a select diversified portfolio of Australian retail assets that generate stable cash flow with growth potential.”
Keppel Capital, which is a subsidiary of Keppel Corporation, had approximately S$29 billion in assets under management as at December 2017.
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