Lendlease strikes $2b malls deal with Cbus Property

Lendlease had successfully fought a lengthy battle to retain control of the funds last year after a revolt led by disgruntled investors Hostplus and UniSuper, which had sought replace Lendlease as their fund manager with Mirvac.

But faced with a flood of redemption requests from the investors in the unlisted malls fund, Lendlease subsequently launched a process to sell down the interests it has in five malls held in one of those three funds, a vehicle known as APPF Retail.

“APPF Retail assessed a range of options to return liquidity to its unit holders. Following careful consideration by the independent board committee, the fund has entered into an exclusive due diligence period with an undisclosed party to acquire all the units in the fund,” Vanessa Orth, managing director of Lendlease Investment Management, said.

“This strategy will enable APPFR to deliver liquidity in a timely and considered manner in the best interests of unit holders. The strong interest received reflects institutional investor confidence in the quality of the fund’s assets.”

The sell-down of assets in the malls fund had already begun with one buyer locked in for the fund’s biggest asset, the $895 million Erina Fair on the NSW Central Coast.

The remaining interests include half stakes in Macarthur Square in Sydney, Lakeside Joondalup in Perth, Sunshine Plaza on Queensland’s Sunshine Coast and Westfield Carindale in Brisbane.

One of Hong Kong’s largest listed real estate investment trusts, the $HK108 billion ($21.3 billion) Link REIT, had made a play for interests in three shopping centres in the fund – a bid that Lendlease chief executive Tony Lombardo described as opportunistic.

The proposed agreement to sell all units in the retail fund would potentially leave Cbus Property as the fund’s sole investor and Lendlease as its investment manager. Commercial agency JLL was involved in advising.

The deal follows months of disruption last year as Lendlease fought retain its management of the overall APPF funds platform. Unitholders had voted against Hostplus’ proposal to strip its mandate over the malls fund. As well, led by Lombardo, Lendlease had outmanoeuvred its opponents to retain control over the industrial fund when it convinced enough unitholders to stay away and prevent a quorum that would have allowed a vote to proceed.

A vote to dump Lendlease from the third fund, which holds office towers, was also thought to be on the cards but has so far not been proposed.

Cbus Property declined to comment on the proposed transaction on Wednesday. It is the real estate investment arm of $100 billion super fund giant, Cbus, which holds the superannuation savings of construction industry workers among others.

Led by Adrian Pozzo, Cbus Property typically develops its own real estate, ranging from high-end real estate to commercial office towers.