Background
Babcock & Brown began its involvement in the real estate sector as an advisor on structured finance transactions. Babcock & Brown’s first principal investment transactions took place in Australia in the early 1990s and focused on sale-and-leaseback transactions to investment grade tenants where Babcock & Brown could add value through efficient, highly leveraged financings.
In 1992, Babcock & Brown expanded this model to include pre-committed developments to creditworthy tenants, for example the Australian Taxation Office. In 1994, Babcock & Brown listed Prime Credit Property Trust, an ASX-listed property trust that held a number of the assets that had been acquired or developed by Babcock & Brown in conjunction with its clients.
In 1997, the Real Estate Division in Australia increased its focus on development transactions; in particular, entering into partnerships with construction companies and smaller development groups that would benefit from Babcock & Brown’s structuring skills and capacity to procure development equity and subordinated debt.
Babcock & Brown’s Japanese real estate operations were established in 1998, concentrating on the leveraged acquisition of income-producing properties and building assets under management. In 2001, Babcock & Brown established a UK-based real estate operation and in 2003 commenced its expansion into other European venues. Babcock & Brown is also pursuing a measured expansion into niche markets in the US.
In April 2005 Babcock & Brown successfully listed the Babcock & Brown Japan Property Trust (the Trust), the first ASX listed property trust focusing on Japanese real estate.
Following a resolution of General Property Trust (GPT) unitholders at a meeting on 2 June 2005, GPT and Babcock & Brown entered into a real estate joint venture (GPT JV) on 30 June 2005 to pursue real estate investment, trading and development opportunities worldwide, and the establishment of a listed and wholesale real estate funds management business in Australia. The GPT JV has exclusive first rights to Babcock & Brown’s global real estate pipeline where funded by non-Babcock & Brown Australian capital, property and funds management activities of Babcock & Brown and GPT in Australia (excluding Japan).
On 7 June 2007, a number of changes to the Joint Venture were outlined to ensure it is well positioned to build on the success and positive momentum achieved to date. The changes resulted in the appointment of Babcock & Brown to manage the Joint Venture portfolio (Joint Venture Fund).