Shopping Centres Australasia (SCA) Property Group, the real estate investment trust spun out from one of Australia's largest retailers, Woolworths, has set up a funds management business with the launch of its maiden unlisted real estate fund.
SCA Unlisted Retail Fund I (SURF 1) will be a closed-ended vehicle for retail investments. The firm is targeting to raise A$32.6 million (€21.5 million; $23.8 million) in a single close for the fund, which will be geared to 49 percent. The fund would initially be marketed to SCA Property Group's unitholders, mostly high-net-worth investors, with the minimum investment requirement set at A$20,000. The offer period will end in September.
Headquartered in Sydney, SCA Property Group currently owns and manages over 80 retail shopping centers in Australia and New Zealand with a total value of more than $1.9 billion as of the end of June. On the group's foray into fund management, Mark Fleming, its chief financial officer told PERE that this would be a growth vehicle for the group.
“We are testing waters with this first fund and if it is successful, we will think of what to do next,” he said. “There is no defined long-term strategy.”
The fund will have a five-year term and is expected to yield 8 percent a year, according to a company statement. The fund will be seeded with five shopping centers from SCA's $1.9 billion property portfolio. The assets, which the firm referred to as non-core in a company statement, are all located in Sydney and regional New South Wales, and are leased to Woolworths with an average lease period of more than 13 years. The five properties were acquired from the SCA trust for A$60.9 million, representing a 12 percent premium to book value.
Woolworths spun off its shopping centers portfolio and created SCA Property Group – pegged to be among the largest real estate investment trusts launched in Australia in the wake of the global financial crisis – in the end of 2012.