GIC skated away from its investment in Westquay (Image: Hammerson)
GIC has sold its 50 percent interest in Westquay for £135 million ($174 million), or nearly 55 percent less than what the Singapore sovereign fund paid for the half-stake in the southern England mall more than seven years ago.
The buyer was London-based developer Hammerson, which had sold the stake to GIC in 2007 for £299 million. The deal gives Hammerson 100 percent ownership of Westquay and its 95,000 square metres (1 million square feet) of retail and leisure space in the city of Southampton.
“This transaction is in line with our stated strategy,” Hammerson CEO Rita-Rose Gagne said in a release. “Combined with our recently enhanced funding position and disciplined approach to capital allocation, we are well placed to deliver growth and value creation.”
GIC didn’t issue a statement on the disposal, which comes as the $801 billion fund recently sold its 17.5 percent stake in Bluewater, the UK’s fifth largest mall, to Landsec for £120 million, taking a 62 percent haircut on its nearly two-decade investment.
Wrong Kind of Discount
Westquay was completed in 2000 by a 50:50 joint venture of Barclays and Hammerson, which bought out the bank’s interest in December 2004. GIC acquired its half-stake in July 2007 when the mall had a book value of £588 million, but the fund’s sale price values the property at a mere £270 million.
GIC chief executive Lim Chow Kiat
“This joint venture represents an excellent opportunity to acquire a premier shopping destination in the heart of Southampton,” GIC Real Estate president Seek Ngee Huat had said upon inking the deal to acquire the mall, which today welcomes 18.6 million visitors a year.
The Singaporean giant had purchased the half-stake in Westquay and the 17.5 percent stake in Bluewater as part of a UK property acquisition spree in the years preceding the 2008 financial crisis.
GIC in 2005 teamed up with Lehman Brothers Real Estate Partners and Canadian private equity firm Realstar Asset Management to buy a portfolio of 73 UK hotels from InterContinental Hotel Group for £1 billion. In 2007 the fund bought the Merrill Lynch Financial Centre office campus in London from the US investment bank for £480 million.
Long-Term Exits
The last two months have seen GIC exiting some of its long-term real estate bets, including with last month’s sale of a central Seoul office tower to an investor group including South Korea’s National Pension Service and Koramco Asset Management for KRW 247.7 billion ($180 million).
GIC had acquired The Exchange Seoul from investment banking giant Morgan Stanley in 2004 for KRW 76 billion, according to Maeil Business Newspaper.
In September, the sovereign investor completed the sale of its 50 percent interest in Westfield Whitford City to Hong Kong investor JY Group for A$195 million ($132.8 million), having helped redevelop the Perth mall with Australia’s Scentre in 2017.
In August, GIC sold the Hilton Fukuoka Sea Hawk in Japan’s fifth-largest city to Mizuho Leasing for an undisclosed price after holding the 1,053-key property since 2007.
GIC seems to be in the business of losing lots of money. I wonder how long can it survive.