Keppel Capital builds US$740m Australian fund with retail property group

It will initially invest in retail assets across 5 Australian states.

Keppel Capital subsidiary Keppel Capital Ventures inked a memorandum of understanding (MoU) with listed Australian property group Vicinity Centres (Vicinity) to build a new private fund that will initially invest A$1b (US$739.51m) into Vicinity-owned retail properties.

According to an announcement, the fund will be managed by a 50-50 joint venture between Keppel Capital and Vicinity. Vicinity will initially inject A$1b of retail assets in five Australian states into the fund. 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 expiries and a diversified tenant base predominantly focused on non-discretionary spending,” Keppel Capital said.

Vicinity has a fully integrated asset management platform and A$26b in retail assets under management across 81 shopping centres

The fund will be Keppel Capital’s first retail-focused real estate fund, said Keppel Capital CEO Christina Tan. “It will allow us to connect our investors to a select diversified portfolio of Australian retail assets that generate stable cashflow with growth potential.”