TOP STORY: $100m Bayfair deal set to break records

By Graham Skellern
The Bay's biggest commercial property deal could see one of the world's largest retail operators taking a half share of the busy Bayfair Shopping Centre in Tauranga.
The mall's owner, Tower Asset Management, is this weekend advertising the sale of a 50 per cent stake in the biggest regional shopping centre in the country and the seventh largest overall with 31,000sq m of retail space and nearly 100 tenants.
The advertised sale - it's bigger than any retail offering in the country for the past four years - is expected to fetch more than $100 million.
Westfield New Zealand director John Widdup told the Bay of Plenty Times that Bayfair was a good asset and his company would investigate the opportunity.
Sydney-based Westfield, which builds and manages shopping centres, is the world's largest publicly listed retail property group.
It has interests in 128 shopping centres in Australia, New Zealand, United States and Britain, worth a total value of more than $A52.5 billion ($62.4 billion).
Westfield is also involved in 19 projects in its key markets, costing the company $US4.8b. ($7.59b)
It owns 10 New Zealand malls including Chartwell in Hamilton and St Lukes and Manukau City is among its stable of seven in Auckland.
Tower's marketing agents Colliers International have already started making presentations to key clients about the Bayfair sale.
Simon Clark, the Colliers Tauranga director, said there was plenty of interest from institutional investors and other shopping centre owners.
"It's the number one provincial mall in the country and the number one asset in the area," he said. "It's a pretty exciting offer - and the turnover makes it an attractive investment."
For the 12 months ending March 31 this year, Bayfair had a turnover of $186 million - up 14.2 per cent on the previous year - and the stores together returned a rental income of nearly $6000 per sq m.
Up to six million shoppers visit Bayfair each year, an average of 500,000 people per month or 15,000 a day.
The shopping centre, on the corner of Girven Rd and Maunganui Rd, is destined to keep expanding with the city's population forecast to hit 150,000 within 20 years.
"The interesting thing that is occurring in Tauranga is the people coming in to live have higher disposable income than those already there - that's why there will be constant pressure on shopping centres like Bayfair," said Greg Whitten, Tower Asset Management's head of property investment.
Faced with the prospect of having to spend more millions of dollars on expansion, Tower decided it was time to diversify its $350 million property fund made up of superannuation and life insurance investments.
Mr Whitten said Bayfair had grown to the point where its assets made up 55 per cent of the property fund - and it had become too dominant.
He said money from the sale would be used to diversify the fund, as well as inject new capital into the future expansion of the shopping centre.
Tower Asset Management became involved in Bayfair in the mid-1980s when it came to life as a 7000 sq m neighbourhood shopping centre with anchor tenant Woolworths and 25 speciality stores.
Countdown supermarket and KMart store, and other shops, were added in 1993. Then Tower spent more than $50 million in 2002 to add the 8000 sq m Farmers department store, increase the size of Countdown by 1000 sq m, introduce more specialty shops and build the Caltex service station, Imbibe restaurant and bar, and a four-level carparking building, taking the number of spaces to 1650.
Bayfair has finished up with 94 tenants including five banks and ATMs, two supermarkets, 15 food outlets and 36 branded specialty stores.
Tower is planning another $40-$50 million expansion this year with an eight-screen cinema complex and more speciality stores and parking.
"Because of the growth of the city, another expansion will be needed within five to six years. We want to make sure that Bayfair dominates the catchment and we are happy to take on a joint venture partner who shares in the vision of the shopping centre and the city," said Mr Whitten.
Tower is calling for expression of interests up to July 12 and then it will negotiate with the preferred party. The process is expected to take two to three months.