The property arm of Australia’s AUD78bn (€51.2bn) Queensland Investment Corporation (QIC), almost a decade after its entry to the UK, is on the verge of exiting Britain to focus on the US.
QIC Real Estate has sold its only UK asset – a half stake in Merry Hill shopping centre in the West Midlands – for £400m (€517m) to its co-investor, Intu Properties.
Although QIC has not formally announced the sale, Intu confirmed at the weekend that contracts had been exchanged.
The British group said the acquisition, which carried an income yield of 5.2%, was scheduled to complete shortly.
Sources in Australia said QIC’s decision to leave the UK had nothing to do with uncertainties surrounding a possible Brexit, but was rather a desire to concentrate on opportunities in the US.
These sources told IPE Real Estate QIC was close to transacting on an open-air entertainment and mall known as The Shoppe at Wiregrass, near Tampa, Florida.
The centre has three large US retailers – Macy’s, Dillards and JC Penny – as its main anchors.
The Wiregrass centre is the third tranche in a $750m (€662m) deal, which QIC struck with the listed US group Forest City Realty Trust late last year.
QIC finalised the first tranche – a 51%-stake in Ridge Hill retail shopping centre located in Westchester County, New York – in February.
The second tranche – a 49% stake in Ballston Common Mall, in Arlington, Virginia – followed in April this year.
The Shoppe at Wiregrass will bring QIC’s total holding of US shopping centres to 13.
On completion of the deal, QIC will have a joint holding in 12 centres with Forest City, with which it set up a $2bn joint venture in 2013.
The Australian manager is seeking to raise $1bn from domestic and international investors looking for exposure to retail assets with growth prospects for the US vehicle.
It is thought the creation of a fund in the US would allow some existing investors to cash out if they chose.
Steve Leigh, global real estate managing director at QIC, has previously said initial market soundings confirmed QIC’s view that there was strong institutional investor interest in participating in a US retail fund.
Leigh told IPE RE then that he saw more prospects for growth in the US market, where QIC centres have been achieving good income growth off the back of robust retail sales.
He believes the Australian market has grown very crowded, especially for core assets, and that the best opportunities will be overseas.
The UK was the first offshore market into which QIC ventured, in 2006.
It acquired the Merry Hill shopping centre stake in December 2006 on behalf of QSuper and another Australian superannuation fund from listed Australian property group Westfield.
Westfield sold a 50% stake in the Merry Hill centre and surrounding development land to QIC for £524bn.
The remaining 50% was sold to Intu with two other shopping centres for £867.8m.
QIC flagged the sale of the shopping centre a year ago – just as it was ramping up its investment across the Atlantic.