Babcock & Brown launches third wave in US

BABCOCK & Brown has increased its investments in the United States to $1.7 billion with the latest acquisition of regional mall owner Gregory Greenfield & Associates.

In addition to GG&A, Babcock & Brown has bought a portfolio of eight regional malls currently managed and controlled by GG&A and will takeover the asset management role for six additional malls in GG&A’s portfolio currently owned by third party investors.

Babcock & Brown’s head of North American real estate division Dan Brickman said this transaction represents Babcock & Brown’s third significant investment in North American retail real estate.

In November 2005, Babcock & Brown, along with The GPT Group bought a portfolio of six regional malls from Colonial Properties Trust, where Colonial retained a 10% interest.

In November 2006, Babcock & Brown and GPT bought an additional mall and power centre from Colonial.

Babcock & Brown and GPT are currently discussing the basis upon which the joint venture between Babcock & Brown and GPT might jointly participate in the Greenfield transaction.

Babcock & Brown’s head of global real estate Eric Lucas said the creation of this retail investment platform will establish Babcock & Brown as a major participant in the US retail market offering enhanced opportunities for future portfolio growth.

Brickman said Greenfield and his team at GG&A are outstanding operators and asset managers of regional malls and their addition to our team represents a very positive step in the growth of Babcock & Brown’s retail real estate business in the US.

Since its inception in 1998, GG&A has acquired 28 regional retail centres on behalf of its investors, at an aggregate acquisition cost of roughly $1.5 billion.

As a result of this transaction, Babcock & Brown will own interests in a portfolio of 16 malls and will asset manage six other regional malls in the US, forming a combined portfolio under management of 22 malls valued in excess of $1.7 billion with a total gross leasable area of 15.3 million sq ft.

Meanwhile, Brickman said Babcock & Brown and GPT intend, upon the completion of GG&A and the eight mall portfolio, to buy out the Colonial minority interest and consolidate the management of the two portfolios under this one platform.

“This will enable Babcock & Brown to more effectively and actively operate and asset manage the combined retail portfolio, providing economies of scale, portfolio diversification across more markets and a potential future acquisition pipeline of assets,” he concluded.

The acquisition is expected to be completed in August 2007.

Australian Property Journal