AMP sews up Manukau retail in year's biggest transaction

By Campbell McIlroy

Friday 3rd November 2000

SPACE RACE: The Manukau Supa Centre has a gross lettable area of 26,000sq m with 17 large-format stores, four food court operators and about 1200sq m of office accommodation

AMP Henderson Global Investors has bought the Manukau Supa Centa from Jonmer Projects for $40 million - a clear signal of its retail direction.

The deal is believed to be the largest sale or investment property transaction in Auckland this year.

Analysts have suggested AMP may be looking at setting up a listed retail property vehicle.

Sources said the company took a long hard look at doing this last year before shelving the plans, but they were now back on the agenda.

There has been a gap in the market since St Lukes Group was taken over by Westfield Trust earlier this year, with the only other real exposure to retail offered through Kiwi Income Property Trust, but its retail exposure was diluted with a strong exposure to office stock.

AMP head of property Ant Beverley said there were no plans on the table to list a separate retail vehicle.

The purchase was part of a two-year-old plan to increase AMP Property Fund's retail weighting to 40-45%.

Traditionally the portfolio's benchmark had been 30%, although up to 1995 it was below 20%. Once the Botany Town Centre development was finished the portfolio's weighting would be taken up to about 43%, he said.

With the outlook for the secondary office market far from rosy the fund had been selling its office assets in favour of the better-yielding bulk retail sector.

Mr Beverley said yields in bulk retail were traditionally higher than specialty retail which was around the low to mid-8% range compared with bulk at 9.5-10%.

The site also offers plenty of room for expansion, with the existing Supa Centa occupying just 9.5ha of the total 18ha included in the sale.

AMP had plans to develop the site further as it needed a push to help it achieve critical mass, Mr Beverley said.

What those plans would be was still being worked through.

The Manukau Supa Centre, not to be confused with the Manukau Shopping Centre owned by Westfield and Axa, has a gross lettable area of 26,000sq m with 17 large-format stores, four food court operators and about 1200sq m of office accommodation.

The location was a winner both in terms of forecast population growth in the South Auckland area and its proximity to motorways and major arterial routes.

Colliers Jardine managing director Mark Synnott, whose firm facilitated the deal, said AMP was probably the most proactive property investor and developer in the country.

The deal consummated a three-year project for Colliers, which has also been involved in the leasing campaign with Jonmer.

But Mr Synnott said for this to be the biggest transaction this year indicated the market was not very active. However, he said it might not be the last big deal before the end of the year.

Mr Beverley said this and the Botany project would keep AMP busy for some time and while the acquisition would be debt-funded the fund's debt ratio would still be well under 20%.

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