Australian Mall Deal Scuttled By Amazon Anxiety

The A$3.5 billion ($2.5 billion) sale of a 10-mall package in Australia by private equity group Blackstone has been called off. Fear of and its own brand of brick-and-mortar stores is at least one cited reason for killing the deal. Blackstone officially walked on the deal last week — the world's biggest alternative asset manager says it will focus on renovating the malls instead, according to sources speaking to Reuters.

Equally compelling, however, is the fact that no one showed any interest in buying up the malls at that price — which experts ascribe to the fact that the east-cost retail real estate market in Australia is slowing down after years of rapid growth and booming prices.

“They had strong offers, but only for individual assets, not for the whole 10 (malls). There’s been a hit on retail-sector sentiment because of the emergence of Amazon,” added the source, who was not authorized to speak publicly.

Blackstone declined to comment.

Most of Blackstone’s suburban mall assets were acquired in 2011 through a series of deals with troubled property management firms Valad Property Group and Centro Properties.

Retail landlords have seen profitable times, pushed by growing population and rising rents. But real estate prices hit peak in April just as Blackstone was announcing this sale, and Amazon chose that moment to announce plans to launch its online shopfront services in Australia.

“The lay of the land has shifted, I suspect,” said property investor Winston Sammut, managing director of Folkestone Maxim Asset Management. “Of course you want to sell at the peak, and I think it looks like the peak has passed.”

Amazon's Australia strategy is still mostly unknown — but as it turns out, even speculation has the power to move markets down under.



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