Aussies strengthen their push into US properties
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.