By Bob Dey
Property editor
St Lukes Group, and through it Westfield of Australia, has had the New Zealand shopping centre business to itself.
Now AMP, starting to build up its retail investment, may start to challenge that dominance.
Other institutions are in there, but in bit-parts. National Mutual sits as a 50 per cent owner of the Manukau City Centre, which Westfield manages for the other half-owner, St Lukes.
It is in Westfield's interests to lift performance, but National Mutual as a passive investor would get a poorer return. Westfield Holdings has had the management contract on St Lukes' portfolio for two years and the separately listed Westfield Trust, controlled by Westfield Holdings, bought the controlling stake in St Lukes last year.
AMP has also been a rather sedate shopping centre investor, holding on to former Hamerson properties in both Australia and New Zealand but doing little with its New Zealand material until 18 months ago.
In something of an awakening, AMP decided to spend $40 million upgrading LynMall, taking the net lettable area to 30,000 sq m to make it third largest shopping centre in the country.
Now AMP Asset Management is working diligently on creating a town centre - bigger and better than a pure retail mall - at Botany Downs, halfway between Howick and Manukau City Centre.
Consent is pending for stage two, which will allow the full $180 million Botany Downs centre to go ahead.
This will give AMP two serious centres in Auckland, both requiring pro-active management for success, but still leave the insurance-based asset manager well short of St Lukes in portfolio numbers and value.
Eighteen months ago, retail investments formed 12 per cent of AMP Asset Management's property portfolio. LynMall took the retail share to 23 per cent and Botany Downs will take it to 40 per cent, at the same time reducing the commercial share from 65 to 40 per cent.
St Lukes' portfolio, eight fully owned centres and two half-owned, was valued at $810 million at the end of 1998 and this year it added Queensgate in Lower Hutt for $135 million.
That price was about $25 million above the point where negotiations started and chopped the yield to 8.5 per cent, although that figure is a variable depending on how Queensgate's development land is treated.
The Queensgate deal becomes a benchmark for the industry and, if it is followed, will have a number of effects. One is to raise the value of the St Lukes portfolio, and for St Lukes to then get the same return on assets it needs to raise returns from its retailers.
That would normally be reflected through other portfolios, although different operating methods and owners' expectations would also mean a range of outcomes. If it is reflected, that means higher rents throughout shopping centres, leading some tenants back to shopping strips or somehow to fit into bulk retail centres. And it makes shopping centres a more appetising investment target, initially for large buyer such as institutions, but also down to small investors through securitisation and managed funds.
During a visit to AMP shopping centres in Sydney and Queensland last week (courtesy of AMP), senior executives of the company were at pains to establish points of difference - both between their style and culture and the highly successful homogeneous style of Westfield, and also between AMP now and the solid, unexciting and far-from-outgoing AMP of the past, before it turned from a mutual society into a corporate beast.
An important feature is that AMP's centres are distinguished by their independent styles, rather than wearing one corporate brand. They do not claim to be a one-suits-all type of centre.
Botany Downs will show the precincts style which AMP's Australian shopping centres are moving towards. At Macquarie in Sydney, it has created two precincts recently - Escape, the entertainment centre, and Loft, for contemporary living.
The centre has a community hall and also has a mall-walking club of about 80, who pace out the corridors once a week. LynMall has adopted mall-walking too, in conjunction with Clive Green. "We're pushing our managers more down the strategic track, rather than just operating," says AMP Shopping Centres' southern regional manager, George White.
This has brought more care for disabled people, including free access to wheelchairs and golf carts to get around the centre. Garden City in Brisbane introduced the "shopability" concept, to the point where disabled shoppers can arrange a time to arrive and have that sort of assistance waiting for them, and it also introduced the parents' room. Both concepts are being introduced at LynMall.
Many of the AMP malls have multiple ownership, including various AMP funds but also third parties. The company also takes more note of its retailers in one aspect, centre marketing, than competitors, which mostly regard the marketing budget as something for the owner to possess and manage.
Two of the AMP malls, Warringah at North Ryde in Sydney and Pacific Fair on the Gold Coast, are unusual in having both internal and external mall space, and Garden City has just created an entrance square with cafes around it and cinemas to one side.
Richard White, AMP Shopping Centres' Queensland manager, says: "The trend now is back to streetscapes, away from the insulated environment of the internal mall. The trend is coming out of the US and is something we can do with Botany Downs."
