3 Dec 2010

KIP comfortable with higher exposure in Auckland

7:07 am on 3 December 2010

Kiwi Income Property Trust is confident its increased exposure to the retail market will prove worthwhile, as the Auckland population grows and the economy recovers.

The trust has purchased the Lynn Mall shopping centre in Auckland from AMP Capital Property for $174 million.

Chief executive Chris Gudgeon says that although the trust has no immediate plans to expand, zoning is in place to allow it in the future.

He does not see the expansion of St Luke's shopping mall, which is to double in size making it the country's largest mall, as a threat.

Mr Gudgeon says the trust is confident Lyn Mall is in a robust position and is well-placed for the future.

Kiwi Income already owns five other shopping malls, including Sylvia Park elsewhere in Auckland and the Northlands shopping centre in Christchurch.

The new purchase will lift the trust's retail exposure from 60% to 63% and its exposure to the Auckland market from 48% to 53%.

Mr Gudgeon says shopping centres are performing well and he's confident consumers will spend.

The sale is subject to Overseas Investment Office approval because the trust's manager, Colonial First State Global Asset Management, is Australian-owned.

But Mr Gudgeon is confident the office will approve the sale.

The purchase of Lynn Mall has increased the trust's debt gearing ratio by 4%, but he says it still remains comfortably below the 40% limit set out in its trust deed.