Colonial First State Global Asset
Management Ltd. is in final talks with two groups to sell its
three Marriott hotels and is seeking to swap interests in
shopping malls in one of its listed property trusts.
Colonial is in due diligence with the two parties and
expects to arrive at final bids for the five-star Marriott
hotels in Sydney, Brisbane and Melbourne by the end of May,
according to Angus McNaughton, who oversees A$18 billion ($18.8
billion) as managing director for property at the Sydney-based
asset manager. He declined to identify the bidders.
The Abu Dhabi Investment Authority and Malaysia’s YTL Corp.
are contenders, the Australian Financial Review reported in
April without saying where it got the information. A group
comprising a Middle Eastern party, U.S.-based Host Hotels
Resorts Inc. (HST) and the Government of Singapore Investment Corp.
may be among bidders for the hotels worth a combined A$450
million, the Australian newspaper said in February without
naming its sources. Colonial’s property unit is selling the
hotels as its unlisted Commonwealth Property Hotel Fund’s term
draws to a close.
“We’re selling the hotels into a rising market, and
there’s been a lot of offshore interest,” McNaughton said.
“We’re focusing now on our core strengths: retail and office.”
Hotel revenues per available room will grow by 7.2 percent
this year, and capital values will rise between 5 percent and 10
percent, according to figures from broker Jones Lang LaSalle
Inc. Retail property rents will rise 2.7 percent this year, and
offices will climb 4 percent, it said.
Listed Trusts
The group, which manages three listed property trusts,
including CFS Retail Property Trust (CFX) and Commonwealth Property
Office Fund (CPA) in Australia, is seeking to scale back its holdings
of some properties in both funds to finance their share-
repurchase programs and to invest in developments and better-
quality assets, McNaughton said.
CFS Retail is seeking buyers for interests in its fully
owned malls and is open to swapping stakes in these centers for
others, McNaughton said. The trust in March sold 50 percent of
its Myer Centre in Brisbane to the Industry Superannuation
Property Trust for A$366 million.
“If we can swap some assets for other assets that have got
better opportunities to grow, and also improve the portfolio
quality, those are the opportunities we’re looking for,”
McNaughton said. “We’re looking for largely regional assets
with some development or expansion capabilities.”
The group is also raising capital for a new unlisted fund
that will invest in shopping centers worth between A$25 million
and A$125 million, he said. Colonial, which will complete the
raising in the next two months with as much as A$300 million,
has received interest from both domestic and international
investors, he said.
To contact the reporter on this story:
Nichola Saminather in Sydney at
nsaminather1@bloomberg.net
To contact the editor responsible for this story:
Andreea Papuc at
apapuc1@bloomberg.net
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