Keppel Capital To Launch A$1bn Wholesale Property Fund in Australia

The proposed fund will be Keppel Capital’s first retail-focused real estate fund.


Singapore’s Keppel Capital Ventures has partnered with Vicinity Centres (Vicinity), a retail property group listed on the Australian Securities Exchange, to establish a new private fund in Australia.

The proposed fund intends to invest in an initial A$1 billion ($740 million) portfolio of Australian retail properties currently owned by Vicinity. The MOU is subject to due diligence, definitive documentation and final board approvals of both parties.

Keppel Capital Ventures is a wholly-owned subsidiary of Keppel Capital Holdings, the asset management arm of Keppel Corporation Limited.

The parties intend to manage the proposed fund through a joint venture where Keppel Capital and Vicinity will each hold a 50 per cent stake.

“Vicinity is expected to initially inject approximately A$1 billion of retail assets located across five Australian states into the proposed fund, and continue to provide property and development services for these assets,” Keppel said in a disclosure to the Singapore Exchange Monday.

Each party is expected to initially hold up to a 10% equity interest in the proposed fund, which is targeted to close by the end of the first quarter in 2019.

The ongoing investment strategy of the proposed fund will be to own, acquire and grow a diversified portfolio of Australian retail assets with stable yields and potential long-term capital growth, underpinned by high occupancy rates, balanced lease expires and a diversified tenant base predominantly focused on non-discretionary spending.

“The proposed fund will benefit from Keppel Capital’s extensive investor network and Vicinity’s strong capabilities in the retail sector in Australia,” Keppel said.

As one of the largest retail property managers listed on the Australian Securities Exchange, Vicinity has a fully integrated asset management platform and A$26 billion in retail assets under management across 81 shopping centres.

“The proposed fund, which will be Keppel Capital’s first retail-focused real estate fund, will expand our track record in Australian real estate investments beyond office developments to include retail properties,” said Keppel capital CEO Christina Tan.

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For Vicinity CEO and Managing Director Grant Kelly, global investors view the Australian retail property market favourably, with its transparency, stable and growing economy, and strong population growth particularly attractive.

“Keppel Capital is an ideal partner for Vicinity, with our aligned objectives of expanding our respective property funds platforms and delivering long-term sustainable growth for partners invested in those platforms,” he said.