Challenger sells down property portfolio

Challenger Financial Services Group will increase the diversification of assets backing its annuities business after selling five offshore properties, in a move that reduces the property exposure of the group’s $3 billion portfolio to 60 per cent.

Challenger yesterday announced the sale of its Las Climas II and III properties in Austin, Texas which house computer giant Dell, for US$71 million ($95 million).

Meanwhile in the UK, the group sold four properties: Minster Court, Senator House, Hayes Park and 3 World Business Centre, for a collective £287 million ($717 million).

The group, which to date has predominantly used property as collateral for its annuities products, has been seeking to back these investments using other assets classes with similar long-term lifecycles to annuities, such as infrastructure.

A recent deal underlining this diversification push was in August when Challenger, as a member of a consortium, won the right to acquire the Wales & the West Gas Distribution Network from National Grid Transco in the UK for around $50 million.

In March, Challenger also sold 11 Australian properties for $152 million to Cromwell Corporation.

Challenger has also sold a number of what it deems non-core assets over the past 12 months.

Last month it offloaded its $150 million margin lending book to Macquarie and in June sold its superannuation administration business to Australian Administration Services.

In addition, late last year it finalised a deal with Great Southern Plantations for the agribusiness manager to acquire its 84,000 hectares of forestry assets for $71 million - a $17 million premium on Challenger’s acquisition price.