GPT Group: All shopped out

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The GPT Group (GPT.AX) is shopped out. The property corporation announced today that it has sold its 50% interest in a NSW shopping centre to Lend Lease Group (LLC.AX) for $397.1 million.

The Erina Fair shopping centre is located on the Central Coast and holds 323 tenancies in its 113,500 m 2 . According to GPT, the centre is currently operating at 99.9% capacity.

“This solid demand has allowed GPT to realise the value of this asset and continue to progress its strategy to move to a more balanced portfolio weighting,” said GPT CEO and Managing Director Michael Cameron in a statement today. With this newest divestment, GPT will have reduced the retail piece of its property pie 7 percentage points to 51% in the last year.

Although Lend Lease’s purchase represents a 1% premium ($3.9 million) over its December 2012 fair value, the corporation will now enjoy full ownership over the facility. Lend Lease already manages the remaining 50% of Erina Fair through its Australia Prime Property Fund.

Foolish takeaway

Property swaps are happening all over Australia and abroad as companies focus strategies. DEXUS Property Groups (DXS.AX) exited its French assets last week in favour of Australian offices, while Goodman Group (GMG.AX) is adding to Asian assets in China and Japan. Divestment and streamlined strategies will help corporations capture economies of scale, expand margins, and improve their institutional knowledge.

But less diverse portfolios also increase the risk of major dips from sector-wide or country-wide economic downturns. Investors will need a closer watch than ever as they watch their profits rise – because the fall could hurt more than ever before.

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More reading

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