SINGAPORE: Singapore sovereign wealth fund GIC has incurred a significant financial loss after selling its 50% stake in the Westquay mall in Southampton, UK.
London-based property developer Hammerson, the original seller, reacquired the stake for GBP £135 million, giving it full control of the 95,000 square-meter retail and leisure complex. This sale price reflects a 55% “haircut” for GIC, as it had initially purchased the stake for £299 million in 2007, valuing the mall then at £588 million.
GIC’s exit from Westquay follows another recent divestment when it sold its 17.5% interest in Bluewater, the UK’s fifth-largest mall. The fund originally bought into Bluewater in 2005 for £318 million and recently offloaded it to British developer Landsec for £120 million, taking a substantial 62% loss on the transaction.
The stakes in both the UK malls were acquired by GIC prior to the 2008 financial crisis.
GIC initially invested in Westquay and Bluewater as part of a UK property acquisition wave, drawn by the malls’ premier locations and high foot traffic. When GIC purchased its stake in Westquay in 2007, GIC Real Estate’s president, Seek Ngee Huat, described the move as “an excellent opportunity to acquire a premier shopping destination.” The Westquay mall continues to attract high visitor numbers, with roughly 18.6 million annual visitors.
Hammerson’s reacquisition of Westquay comes after its initial development as a 50:50 joint venture with Barclays. Hammerson became the sole owner in December 2004 by purchasing Barclays’ stake. Now with GIC’s exit, Hammerson has again consolidated full control of the retail complex in Southampton.
Beyond the UK, GIC has been divesting from some of its international real estate investments. In recent months, it sold The Exchange Seoul, an office tower in South Korea’s capital, for KRW 247.7 billion (USD $180 million) to a consortium including the National Pension Service of South Korea and Koramco Asset Management. GIC initially bought the Seoul property from Morgan Stanley in 2004 for KRW 76 billion, significantly benefiting from its appreciation in value over time.
Additionally, in Australia, GIC sold its 50% stake in the Westfield Whitford City shopping center in Perth to Hong Kong investor JY Group for AUD $195 million (USD $132.8 million). GIC had been a partner in the mall’s redevelopment with Australia’s Scentre Group in 2017.
In Japan, GIC recently offloaded the Hilton Fukuoka Sea Hawk hotel to Mizuho Leasing for an undisclosed price, ending a 16-year ownership of the 1,053-room property in Fukuoka.
These sales perhaps reflect a recalibration by the Singaporean wealth fund, which manages approximately USD $801 billion. GIC has not issued statements on its recent exits.
“62% haircut” – GIC sells stake in UK mall purchased at 312 million for 120 million