GPT GROUP has moved to streamline its investments and asset base with the sale of a half interest in two retail assets for $551.2 million to the GPT Wholesale Shopping Centre Fund.
Although it is an internal sale, GPT has said that over time it will reduce its stake in the wholesale funds from the current level of 20 per cent, allowing for a possible float in the medium term.
GPT will also contribute $100 million to a capital raising by the shopping centre fund, which will be launched next month.
GPT can use the cash raised through the sale to lower its gearing and for other developments.
The deals come a day after GPT said it had withdrawn its half share of the $700 million MLC Centre from the market. The property's joint owner Queensland Investment Corp will continue to market its share.
The GPT chief executive, Michael Cameron, who is to host an investor day today, said the sales to the wholesale fund were part of the group's strategy to actively manage the portfolio and continually seek opportunities to optimise returns to securityholders.
He said potential uses of the capital raised from the sales included selective acquisitions and developments in logistics and business park assets in line with his strategy to increase GPT's exposure to the industrial sector.
But he added that the sale was not a reflection of the challenging conditions in the retail sector; nor was GPT intending to quit the business.
"We continue to believe in the future of retail as a strong investment class. After the sale of GPT's stakes in Casuarina and Woden, retail remains an important focus of our portfolio strategy," he said.
Simon Wheatley, a senior REIT analyst at Goldman Sachs, said the asset sales represented fair value given they were being transacted at December 2011 book value plus any incremental capital expenditure spent on the centres.
"Post GPT's commitment to GWSCF's capital raising, the net proceeds from the asset sales are about $451.2 million," he said.
"The two key benefits of this return on cash are lower gearing and a slight positive to return on capital employed given the increased fund stakes, and in turn, future funds management, property management and development management fees."
He said GPT was expected to also use the cash to reinvest in development works, industrial property acquisitions, as well as accelerate its continuing share buy-back program.