Aussies strengthen their push into US prop­er­ties

The Weekend Australian - Review - - Prime Space - From Page 8

Sam Zell, the founder of Eq­uity Of­fice, the big­gest US of­fice REIT, spent much of 2006 sell­ing prop­er­ties in sec­ondary mar­kets such as At­lanta and buy­ing in New York, Chicago and Wash­ing­ton.

He sold Eq­uity Of­fice in Fe­bru­ary to New York- based Black­stone Group for a record $ US39 bil­lion.

‘‘ His­tory says you’re not go­ing to get the de­mand or the growth in the mid­dle of the coun­try,’’ Zell said at an in­dus­try con­fer­ence in New York.

Cen­tro Prop­er­ties Group, Aus­tralia’s sec­ond- big­gest shop­ping cen­tre owner, paid $ US5.2 bil­lion for New Plan Ex­cel Re­alty Trust, ac­quir­ing 467 prop­er­ties across 38 states, mostly strip malls an­chored by gro­cery stores and re­tail­ers such as Wal- Mart Stores in towns in­clud­ing Syl­va­nia, Ohio, and Mont­gomery, Alabama. It was Cen­tro’s sixth takeover in the US since 2003.

The com­pany ex­pected New York­based New Plan to yield an av­er­age of 6.75 per cent, chief op­er­at­ing of­fi­cer Gra­ham Terry said in Fe­bru­ary af­ter Cen­tro an­nounced the deal, the big­gest this year by a for­eign buyer.

Chris Law­ton, a New York- based part­ner in Ernst & Young’s global real es­tate prac­tice, says that su­per­mar­ke­tan­chored malls such as those bought by Cen­tro are prob­a­bly more re­ces­sion­proof than Man­hat­tan of­fice tow­ers.

What­ever hap­pens with the econ­omy, ‘‘ peo­ple still have to eat’’, he says.

In March Mac­quarie agreed to buy Spirit Fi­nance, a US REIT that owns stand- alone restau­rants, auto deal­er­ships and re­tail out­lets in 43 states, for $ US1.6 bil­lion, or $ US3.5 bil­lion in­clud­ing debt. It made the pur­chase with Kaupthing Bank, the big­gest bank in Ice­land.

Of $ US3.9 bil­lion of prop­erty in­vest­ments in 2007 by groups from the Mid­dle East, less than a fifth has gone out­side New York, Chicago and Wash­ing­ton, ac­cord­ing to Real Cap­i­tal.

In­vest­corp Bank BSC of Bahrain was an ex­cep­tion, buy­ing more than $ US6 bil­lion of US prop­er­ties.

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