Keppel unit to set up A$1b wholesale Australian property fund with Vicinity

Keppel Capital Ventures and Vicinity Centres will manage the proposed fund via a 50-50 joint venture.
Keppel Capital Ventures and Vicinity Centres will manage the proposed fund via a 50-50 joint venture. PHOTO: REUTERS

SINGAPORE - Keppel Corporation, through its asset management arm Keppel Capital Holdings, has entered into a memorandum of understanding with Australian-listed retail property group Vicinity Centres to establish a new private fund which will invest an initial A$1 billion (S$1.01 billion) into property currently owned by Vicinity.

Vicinity will initially inject some A$1 billion of retail assets located across five Australian states into the proposed fund, and continue to provide property and development services for these assets, according to Keppel's media statement.

Keppel Capital Ventures - a wholly owned subsidiary of Keppel Capital - and Vicinity Centres will manage the proposed fund via a 50-50 joint venture, with each party expected to initially hold up to a 10 per cent equity interest in the proposed fund, targeted to close by the end of the first quarter in 2019.

"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," Keppel added.

Christina Tan, chief executive of Keppel Capital said: "Keppel Capital has been actively pursuing opportunities with best-in-class partners to grow into new markets and asset classes. 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."

Vicinity Centres is listed on the Australian Securities Exchange, and has a fully integrated asset management platform and A$26 billion in retail assets under management across 81 shopping centres.

Keppel Corp's shares ended Friday trading at $6.73, down 0.59 per cent.