AMP Capital’s Wholesale Shopping Centre Fund has recorded a $517.8 million loss after significant write-downs to values were taken to funds assets in 2020.
The portfolio, of mostly major and super regional malls, were once regarded as fortress assets, however few could have predicted what the impacts a global pandemic may bring. Total property revenue for the Fund fell as rent waivers and deferrals were mandated for tenants, and vacancies rose, however the largest impact to its statutory results was a $397 million write-down in the value of the portfolio.
The loss resulted in the Fund delivering a total return of -15.7% for the 12 months ending December 2020 which, whilst significant, is in line with the MSCI/Mercer benchmark for all unlisted retail funds of negative -16%.
Notwithstanding the write downs, AMP Capital continues to consider how best to reinvent their assets. In February, the Group announced significant changes to Indooroopilly, consolidating & relocating tenancies to make way for an Automotive showroom and experience.
One of the Funds’ largest assets is a 50% interest in Macquarie Centre in Sydney’s north, where AMP Capital continues to refine its $1.0bn redevelopment aspirations.
In September last year, the Group submitted an amendment to their previous Development Application for the Centre to transform it into a world class leisure and entertainment precinct. At the centrepiece to the changes is the proposed relocation of the iconic Ice Rink into a new roof top destination. The Rink’s inclusion in the Centre’s future has been hotly debated over the years, with AMP Capital earlier attempting to reduce the size of the Rink (or remove it entirely) in favour of higher rent paying tenants. Actions by the Ice Rink operator to have the link registered as a heritage item in 2020 placed pressure on the Centres’ owners to re-think its inclusion – which it has now done.
The new DA also seeks approval for the:
- creation of Station Plaza, a new outdoor civic space;
- landscaping and public domain improvements;
- new pedestrian access points;
- construction of a new retail podium, basement parking and roof deck parking providing an additional 500 car parking spaces; and
- removal of one vehicular crossover.
The DA modification formed part of a larger redevelopment proposal for the Centre which is to include four residential towers along the Herring Rd frontage of the site, along with more parking , more entries, more shops etc etc.
The Fund holds a 50% interest in Macquarie Centre in a Joint Venture alongside ADIA and CPBIB and whilst all of this makes strategic sense in a pre-pandemic world, the cost benefits of such a massive redevelopment are likely to be challenging in the current environment, meaning support from ADIA and CPBIB, let alone potentially disgruntled AMP Capital investors, will be piecemeal at best.
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