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ISPT enters into property joint venture with Coles
ISPT has entered into a joint venture with Coles and will acquire a 75 per cent interest in an initial portfolio of 19 Coles-owned shopping centres.
The initial portfolio is valued at approximately $532 million, and the transaction will deliver proceeds to Wesfarmers of approximately $400 million.
Under the arrangement, Coles will retain a 25 per cent interest in the centres and will continue to manage the centres. ISPT and Coles will also look to place further properties into the joint venture as opportunities arise and Coles will maintain development control over these properties.
ISPT CEO Daryl Browning said the deal was “an excellent opportunity for our investors to gain returns from this very resilient retail sector and access a good quality geographically diversified retail portfolio anchored by the resurgent Coles Group”.
ISPT has established a new fund, ISPT Retail Australia Property Trust to own the centres and raised $500 million from its largely industry fund investors to fund the acquisition.
Coles Finance Director Rob Scott said the joint venture would deliver strong benefits to both parties. “This joint venture with ISPT means Coles has secured a long-term property partner with closely aligned commercial interests,” Mr Scott said.
“By retaining property development and management rights, Coles can ensure that it has flexibility and control of the assets, allowing us to drive the performance and value of the stores, and enhance the in-store experience for our customers.
“The arrangement also affords Coles the opportunity to secure funding for our future store growth plans.”
Wesfarmers Finance Director Terry Bowen said that the joint venture represented a continuation of Wesfarmers’ strategy to release capital from its balance sheet, with this transaction releasing approximately $400 million of capital.
“This joint venture with ISPT progresses Wesfarmers’ plans to recycle capital in business divisions that have experienced strong growth in freehold property. Wesfarmers will continue to look for innovative structures and partnerships such as this to create value for our shareholders,” Mr Bowen said.