Babcock & Brown and GPT have further strengthened their relationship with the formation of a new overseas based funds management business to pursue real estate investment opportunities globally.
GPT and Babcock & Brown will contribute up to $800 million in additional capital to the joint venture to be used to pursue real estate investment, trading, and development opportunities globally.
This latest agreement is the next step in the GPT & Babcock & Brown relationship, which started in June 2005 and has since acquired over $5.5 billion in assets in Europe and the United States.
The overseas based JV will see GPT contribute $608 million of preferred capital, and Babcock & Brown and GPT will each contribute $96 million of ordinary capital.
Following the commitment, the JV will have total equity of $2.2 billion.
In addition, Babcock & Brown and GPT have agreed to commit up to an additional $200 million capital in the same proportions as the $800 million, as short term capital to be used where the JV has a strategy to re-cycle capital to repay this commitment within a short period.
GPT’s chief executive Nic Lyons said the commitment was a positive step for both groups in progressing the JV’s strategy and evolving its business model, building on the success of the relationship to date and the positive momentum the JV has established in Europe and the US.
“We had indicated that the JV, having reached full investment, would now look to the next stage of its strategy and that would include reviewing the JV’s capital requirements and structure and the opportunity to recycle capital through the creation of managed funds,” he added.
Meanwhile, the JV has flagged the creation of third vehicles. Lyons said assets already acquired by the JV now provide significant opportunities to seed both listed and un-listed funds, which would be managed by this platform.
He added that this strategy, which forms part of the strategy to recycle capital within the JV, will initially be focussed on Europe.
Lyons said the creation of a jointly managed European Retail Fund seeded by assets held by the JV and Babcock & Brown, is currently being progressed.
“The additional capital will be used to continue the Joint Venture’s strategy of investing in portfolios of property investments with geographic and sector diversification offering attractive investment returns. These opportunities are expected to be largely in the existing portfolios of light industrial, US retail and US multifamily, with the potential for one to two additional portfolios to be added over time.
“In addition the Joint Venture will continue to review opportunities to create managed funds (such as the European Retail Fund) and invest in asset management businesses (such as Halverton), thereby creating long term enterprise value,” he concluded.
Last month, GPT Babcock & Brown jointly bought a 50% stake in Halverton Real Estate Investment for €15 million ($A25 million).
Halverton is a specialist aggregator and manager of Pan European light industrial and other multi let assets, headquartered in London.
The JV has also bought a 1% equity interest separately held by Halverton in the JV’s portfolio of light industrial assets for €2.2 million ($A3.7 million).
By Adam Parsons and Kathryn O’Meara
