Cash injection - $278m flows into property

Cash injection - $278m flows into property

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Carolyn Cummins Commercial Property Editor
April 17, 2007
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MORE than $278 million was pumped into the property market yesterday in three separate deals involving the purchase of overseas and domestic assets.

Property analysts say that despite the recent volatility in the listed property trust sector, cash continues to flow into the market.

The largest deal was by Rubicon Japan Trust, which bought five office properties in Tokyo, Sendai and Sapporo for ¥14.64 billion ($148.08 million).

Rubicon managing director Gordon Fell said the deal would be funded by debt, taking the trust's gearing from a market average of 48.5 per cent to 56.2 per cent.

He said the latest acquisitions would push the trust's total assets under management to $4.7 billion, including $4.5 billion of international real estate and loan assets.

Challenger Diversified Property Group, in which James Packer holds an interest through his 20 per cent stake in Challenger Financial Services Group, paid €55.5 million ($90.15 million) for six French industrial and retail properties.

The trust's manager, Carmel Hourigan, said the deal was the first European foray since the group formed a joint venture with London-based Protego Real Estate Investors in February.

Ms Hourigan said the trust would use debt to fund the deal, which would increase its exposure to the European property market to about 12 per cent of the overall fund.

"The French industrial property market is highly competitive," Ms Hourigan said in a statement. She said the assets were relatively new and therefore required only low levels of capital expenditure.

The recently formed Real Estate Capital Partners (Recap) bought Singapore Airlines's Australian property portfolio, worth $40 million, in a joint venture with Investec Bank. The assets include the airlines's offices at 17-19 Bridge Street, Sydney, and 416-420 Collins Street, Melbourne.

Investec will take up the interest in the joint venture through its property fund, Investec Wentworth Specialised Property Trust.

Singapore Airlines appointed Peter Whitaker of Savills last year to find a buyer for its assets under a sale and leaseback arrangement.

It is Recap's first direct property play. Until now, it has been a manager of funds, with 20 per cent invested in unlisted property, 30 per cent in actively managed listed property trusts, 25 per cent in index-linked LPTs and 25 per cent in other financial structures.