Lend Lease, Future Fund join on $1.4bn ING deal

Using existing capital, spread among Lend Lease's listed and wholesale vehicles, the consortium will split the ING fund's 14 retail assets between them.

But the deal has not pleased everyone. Ratings agency Standard & Poor's placed Lend Lease on "creditwatch negative".

Lend Lease's Australian Prime Property Fund will take over the $450 million Joondalup Shopping Centre in Perth, with a yield of about 6.9 per cent. The remainder of the assets will be allocated to Lend Lease and its retail wholesale funds.

Property analysts said the transaction would set a benchmark for other sales of shopping centres that are said to be in the wings, including some of the higher-quality Centro-owned centres.

Although details are scant, it is thought Lend Lease will contribute about 20 per cent of funds from its existing capital base, equal to about $200 million. No extra funds will be required from shareholders.

Tarun Gupta, the chief executive of Lend Lease's investment management business in Australia, said the deal was a significant step towards building the group's retail platform.

"With our capital partners, whom we cannot name, we had a strategy of increasing the scale of our wholesale retail business," he said.

ING's head of real estate, Denis Hickey, said the ING Retail Fund was a private closed-end, fixed-term wholesale fund that was due to expire in two years.

"As part of our strategic review for the fund, we have explored all options to maximise unit holder value, and at this stage there is merit in continuing to work with Lend Lease to finalise this offer."

Lend Lease, as the expected manager, will now have more than $10 billion in funds under management, according to analysts at JPMorgan.

The broking firm says that while the deal will be positive for Lend Lease, it harbours some lingering concerns about the quality of the ING portfolio, but adds there maybe some partial divestment of assets in the future.

THE SPENDING SPREE

VICTORIA

Endeavour Hills Shopping Centre

Geelong Homemaker Centre

Stud Park Shopping Centre, Rowville

WESTERN AUSTRALIA

Armadale Shopping City

Harbour Town Shopping Centre

Lakeside Joondalup Shopping City

QUEENSLAND

Harbour Town Shopping Centre

Wynnum Plaza Australia, Wynnum West

ACT

Manuka Terrace

NSW

Menai

Marketplace

Settlement

City Shopping

Centre, Port Macquarie

Style Homemaker Centre, Alexandria

SOUTH AUSTRALIA

Mile End Homemaker Centre