GPT funds hit the retail expansion trail amid office uncertainty

The listed group is shaking up its flagship office and retail funds that control about $14bn worth of the country’s best towers and malls.

An artist‘s impression of shopfronts in Rouse Hill Town Centre, as submitted to Hills Shire Council in May of 2022. There are plans to expand the centre.

The listed GPT Group is looking to speed up its shift from being a property landlord to more of a funds manager by seeking to spin off a stake in the massive Rouse Hill Town Centre in Sydney’s northwestern suburbs into its flagship $3.6bn retail property trust.

The company is stepping up efforts to expand in the lucrative property funds management field under new chief executive Russell Proutt, but it is not all smooth sailing as investors in its near $9bn office fund signal their dissatisfaction.

GPT is considering a move that would involve a half-interest in the Rouse Hill Town Centre being slotted into the well-regarded GPT Wholesale Shopping Centre Fund. That fund was in the spotlight as a potential merger partner for AMP Capital’s flagship shopping trust in 2022, but that did not go ahead.

Now a 50 per cent interest in the 70,100sq m regional shopping centre, which was held on GPT’s books at $747.1m at the end of June on a capitalisation rate of 5.75 per cent, could go into the fund. That comes after a move on the Rouse Hill centre some years ago by Morgan Stanley’s real estate arm, which did not proceed.

The Rouse Hill Town Centre opened in 2007, and changed retail in northwestern Sydney as it was built from scratch. It is now one of the listed group’s flagship holdings and GPT has expansion plans to grow the centre and build four apartment towers.

The property is billed as combining a market town centre with the latest shopping, dining and lifestyle offerings across about 250 tenancies, including two discount department stores, two supermarkets and a cinema and entertainment precinct.

Anchors include Woolworths, Coles, Big W, Kmart and Reading Cinema, and shops include fashion, homewares, community services and lifestyle offerings across more than 230 specialty stores.

GPT has been expanding in retail. The private Perron Group last week sold stakes in two of its largest Perth shopping centres – Cockburn Gateway and Belmont Forum – to GPT in one of the largest property exits by the company since founder Stan Perron died six years ago.

The pair unveiled a new retail partnership last Friday, under which GPT will acquire from Perron a 50 per cent interest in the two premium Perth retail assets for about $482m.

GPT is also making a push into funds management and is stepping up plans to take on more mandates and seeking to expand its existing vehicles that were set up almost two decades ago.

The shopping centre fund is one of its two traditional trusts, alongside its office fund. Investors had backed the retail fund and last month voted up a plan to overhaul its operation. Those fund investors agreed to modernise it, replacing the existing 10-year liquidity window due in 2027 with a more regular redemption process and to cut fees.

Mr Proutt said in a statement last month that the changes would broaden the fund’s appeal, with the move showing GPT’s ambition to provide innovative investment solutions. Shopping centres are also being bolstered by strong tailwinds despite the cost-of-living crunch.

Similar proposals were put to the GPT Wholesale Office Fund but they did not hit the 75 per cent voting approval threshold. Industry sources suggested this reflected unhappiness among larger investors who were seeking to exit.

Mr Proutt said GPT was committed to working with office fund investors to optimise returns in a dynamic investment environment and achieve long-term outperformance.

JPMorgan analyst Richard Jones said the vote “suggests a large proportion of GWOF investors are considering redeeming their investments in 2026, and are unwilling to accept changes to terms which would inhibit their ability to redeem, even if base fees are reduced”.

GPT is separately in line to obtain management rights over a 50 per cent stake in Sydney’s Macquarie Centre, which is worth $830m, after a court case, which is now under appeal by Dexus.