Vicinity Centres makes grab for Collimate Capital retail gems

The battle for the former AMP Capital business has now switched to big shopping centres but incoming owner Dexus is confident it will keep the funds.

An artist's impression of towers planned at Sydney's Macquarie Centre.

Retail property group Vicinity Centres is making an opportunistic play to manage a swag of regional shopping centres worth about $6bn in total held in the Collimate Capital empire which is being sold to Dexus.

The shopping centre landlord is looking to spark up its own funds management ambitions by taking on the management of key retail assets out of the former AMP Capital empire, now known as Collimate.

But Dexus, which is buying Collimate, is confident that it can hold the platform together, even as it deals with a challenge from Mirvac, which is separately chasing the management of the $8bn AMP Capital Wholesale Office Fund.

Vicinity last week wrote to the trustee of the AMP Capital Shopping Centre Fund, which had about $3bn in assets, proposing that it become the manager of about 14 assets it has stakes in across Australia and New Zealand.

It also wrote to the trustee of the unlisted AMP Capital Retail Trust, which has a 50 per cent in Sydney’s Macquarie Centre and fully owns Pacific Fair on the Gold Coast. Those centres are each worth about $1.7bn.

Vicinity has been a big winner in recent months from the reopening trade with its stock rising partly as shoppers return to centres and as its assets regain their lustre with larger centres trading at a premium.

The pooled portfolio has a high weighting to regional and super regional shopping centres, which are Vicinity’s speciality, and the company has long sought to expand in funds.

While the suitor declined to comment on the move, it would represent an expansion back into funds after it canned a planned $1bn retail property fund it had proposed with Singapore’s Keppel Capital in 2019.

The change over to Dexus opens a window for rival groups to approach the fund trustees with their own proposals. But Dexus is pitching its well-established record in running pooled funds and their complex compliance and governance mechanisms.

Under its deal, it would have a combined retail funds empire of about $13bn with a long performance record and it is offering stability to Collimate Capital management looking to transfer across.

Vicinity’s approach will be considered by the fund trustees, which industry sources said had also fielded earlier approaches from rival retail property groups, including the GPT Group.

However, there is no process running to find an alternative to Dexus as a retail manager and prospective suitors face the high hurdle of convincing the superannuation funds investor in the vehicles to change away from familiar management teams, who are slated to shift to Dexus.

The battle for the management of the AMP Capital Wholesale Office Fund is still simmering with Mirvac closer to gaining due diligence to put a proposal to become manager. The group believes it is well-positioned with the fund’s fate dependent on the level of investor support either it or Dexus are able to garner from investors.

AMP Capital was the biggest retail property deal-maker last year. In a series of transactions, the AMP Capital platform secured full control of Sydney’s Macquarie Centre and Pacific Fair on the Gold Coast.

It began with a $2.2bn recapitalisation of the AMP Capital Retail Trust by UniSuper and Cbus Property. The AMP Capital Shopping Centre Fund then bought an additional 25 per cent stake in Macquarie Centre for $422.5m. In a second transaction, AMP Capital, together with UniSuper and Cbus Property bought the remaining 20 per cent of Pacific Fair in Queensland for $336.4m through the AMP Capital Retail Trust.

The transactions left the ASCF and ACRT each holding 50 per cent of Macquarie Centre, while ACRT wholly-owns Pacific Fair.

The AMP Capital Shopping Centre Fund owns stakes in major centres including Indooroopilly and Royal Randwick, and Westfields including Liverpool, Southland and Tea Tree Plaza.

AMP Capital built up one of the top shopping centre platforms in Australia and retail property makes up about 39 per cent of the Collimate Capital local real estate unit.

The entire local management business, including infrastructure funds, was last month sold to Dexus by AMP for $250m, with additional payments for co-investment stakes in the funds, and an earn out if they stay with Dexus long term.

While Dexus is confident of keeping the platform intact, if funds go to other managers AMP could miss out on receiving the earn outs relating to keeping the funds if they move to other managers.