Ausis Gorging on US Real Estate

Australia Property Investment Vehicles Seek A$1 Billion in US Real Estate

September 3, DOW JONES NEWSWIRES SYDNEY - Major Australian institutional investors will fly to the U.S. for roadshows next week as investment banks seek to raise approximately A$1 billion to bring two real estate investment trusts to the Australian market by the end of 2003.

U.S.-based shopping center development and management firm CBL & Associates Properties Inc. along with Australia-based Galileo Funds Management are believed to be seeking to raise up to A$500 million to form a listed property trust which will hold U.S. retail assets. Merrill Lynch has been appointed to work on the trust, which will be listed on the Australian Stock Exchange.

Meanwhile, UBS has been working on the details of an initial public offering involving Macquarie Bank Ltd. and U.S.-based Developers Diversified Realty Corp. Macquarie DDR Property Trust will hold U.S. shopping mall assets. They are taking fund managers on a U.S. roadshow in the next few weeks. Its property vehicle may also seek equity of around A$500 million,

A recent story from Bloomberg reported that Australia's Centro Properties Group, Australia's largest manager of shopping malls by number, agreed to buy almost half of a $488 million portfolio of 14 U.S. shopping centers in California, amid dwindling opportunities to expand at home. The high demand for retail property in Australia is making it more difficult for Prime to grow domestically.

There's been about $7 billion of takeovers in Australia's property-trust industry this year, according to Bloomberg data, driven by a shortage of urban land for new developments. That's driven real estate managers such as ING Office Fund and Principal Office Fund, recently taken over by Investa Property Group, to seek expansion in the U.S.

Sydney-based Westfield Holdings Ltd. is already established in the U.S. It's joined U.S.-based Simon Property Group Inc. in a $4.25 billion bid for Taubman Centers Inc., which would give the companies 30 U.S. malls, including the Beverly Center in Los Angeles. Westfield is already the No. 4 manager of U.S. shopping malls.
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