Dexus fund to check out of Macquarie Centre as court backs super fund buy
The property group’s funds management ambitions have taken a hit after two of the country’s biggest super players took it on in court and were vindicated on appeal.
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A trust run by property group Dexus has failed in a bid to overturn a court decision which would force it to sell a half interest in Sydney’s landmark Macquarie Centre to the superannuation funds which co-own the mall.
The company’s flagship shopping centre fund had appealed a NSW Supreme Court decision made last year which would compel the sale of its half interest in the $1.6bn property to superannuation fund heavyweights UniSuper and Cbus Property.
The court loss effectively takes a major chunk out of the Dexus fund as it must sell the stake — worth about $830m — to the super funds, which have handed the management of their interests to rival property company GPT Group.
The move to appeal the original court decision was made by the independent directors of the Dexus Wholesale Shopping Centre Fund, which runs independently of the property company.
A Dexus spokesperson said the fund would work with the co-owners on handing over control of the centre.
“We acknowledge the Supreme Court’s decision and will work constructively with the other co-owner to ensure an orderly transition. The responsible entity and management team of DWSF remain committed to ensuring the best possible outcome for DWSF investors as a whole,” he said.
GPT declined to comment.
The centre is the largest shopping destination on Sydney’s north shore and is also destined to house a series of apartment towers in coming years as part of a longer term plan to introduce residential accommodation to the site.
The Dexus-run property fund had sought to appeal the original ruling sparked by its super fund co-owners arguing a “prohibited transaction" had occurred when Dexus bought AMP Capital’s local real estate and infrastructure business.
AMP Capital had managed the shopping centre fund which owned half of the centre but the transfer of this vehicle to Dexus was not allowed under a co-owner agreement and gave the funds the pre-emptive rights to acquire the interest in the property.
The appeal, heard at the end of March, was quickly dismissed. The judgment backed the original finding that a prohibited disposal took place, the super funds had complied with notice requirements to Dexus, and found they were entitled to acquire the whole of the Dexus fund’s interest in the mall.
UniSuper and Cbus Property had bought into the Macquarie Centre as part of a larger $2.2bn investment they made in 2021 which also included taking an 80 per cent stake in the Gold Coast’s Pacific Fair complex.
It was Australia’s largest ever shopping centre deal and put big retail centres back on the agenda of investors after the pandemic.
Trading of big malls came under pressure afterwards as interest rates jumped and centre values fell on the back of a series of discounted deals. But, they are now back in vogue as rates have stabilised and investors chase a safe haven amid volatile stock markets.
The superannuation funds, guided by GPT, are also well positioned to realise plans for residential developments on the site in coming years.
The court decision bolsters GPT’s ambitions in funds management, where it has flagged expansion under chief executive Russell Proutt, but is a hit to Dexus, which had already lost the management of a major office fund to rival Mirvac when it picked up the AMP Capital business.
Once the half interest in the Macquarie Centre in Sydney is sold off, the Dexus fund will be left with a stake in Westfield Southland in Melbourne, owning the Royal Randwick Shopping Centre in Sydney’s eastern suburbs, an interest in the Indooroopilly Shopping Centre in Brisbane’s western suburbs, as well as owning the Ocean Keys centre in Perth and the Bayfair Shopping Centre in New Zealand.
Dexus shares dropped by 14c to $7.01 in a weak day for the market.
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Originally published as Dexus fund to check out of Macquarie Centre as court backs super fund buy
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