Keppel Capital, Vicinity Centers propose private fund for Australian retail property

Australian notes and coins

Keppel Capital Ventures said on Monday it entered a memorandum of understanding with Australian retail property group Vicinity Centers to establish a private fund to invest in Australian retail properties.

The proposed fund is expected to initially invest in A$1 billion portfolio of Australian retail properties currently owned by Vicinity, it said in a filing to SGX before the market opened on Monday. The properties are located across five Australian states, the filing said.

Keppel Capital Ventures and Vicinity plan to managed the proposed fund through a 50-50 joint venture, and each party is expected to initially hold up to 10 percent equity interest in it, it said. The fund is targeted to close by the end of the first quarter of 2019, the filing from Keppel said.

“The ongoing investment strategy of the proposed fund will be to own, acquire and grow a diversified portfolio of Australian retail assets with stable yields and potential long-term capital growth, underpinned by high occupancy rates, balanced lease expiries and a diversified tenant base predominantly focused on non-discretionary spending,” the filing said.

It noted that Australian-listed Vicinity currently has an asset-management platform and A$26 billion in retail assets, across 81 shopping centers, under management.

Christina Tan, CEO of Keppel Capital, 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 cashflow with growth potential.”

The MOU is subjected to due diligence and final board approvals, the filing said.

Keppel Capital Ventures is a wholly owned subsidiary of Keppel Capital Holdings, which is Keppel Corp.’s asset management arm, it said.