This article is from the Australian Property Journal archive
LENDLEASE-managed Australian Prime Property Fund Retail is offering its 50% stake in Westfield Marion, South Australia’s only super-regional and largest shopping centre, with expectations of around $740 million.
Investors’ attention is now squarely on the city of churches, coming just six weeks after private equity giant Blackstone put Rundle Place back on the market, but they may have to compete with the asset’s co-owner and manager, Scentre Group, given the retail giant has pre-emptive rights over the stake.
Less than a year ago, Scentre Group acquired a half share in Sydney’s Westfield Eastgardens for $720 million, which it was already managing.
Marketing agents Simon Rooney, JLL’s head of retail investments, and Colliers’ Lachlan MacGillivray said the offering presented a rare opportunity to partner with Scentre Group.
“There has been a shortage of large, high quality retail assets offered to the market. Westfield Marion is expected to be the most highly sought after asset in the country this year, appealing to various core investors, both domestically and internationally, because it’s one of the top 20 centres in the country for sales productivity.”
Shopping Centre News’ annual “Big Guns” report for 2019 had Westfield Marion ranked 20th in the country for specialty MAT per sqm, at $11,353 per sqm, and 13th for moving annual turnover at $839.34 million.
Rooney said the centre’s long-term return performance will be underpinned by its dominant nature.
“Fortress assets of the calibre of Westfield Marion are very highly sought after in the international marketplace.”
Located 13kms south-west of the Adelaide CBD, Westfield Marion is also Australia’s 11th largest centre by size with a total gross lettable area of around 136,837 sqm, and has parking 5,549 vehicles.
The centre is anchored by major department stores David Jones and Myer, as well as Harris Scarfe, Big W, Kmart and Target, and Coles, Woolworths and ALDI supermarkets, Dan Murphy’s, Bunnings, an Event Cinema, and around 310 specialty stores. It is set on a 22.9-hectare site that offers long-term masterplan opportunities for mixed-use development.
MacGillivray said super-regional shopping centres represent the pinnacle of shopping centre investments, offering the highest risk-adjusted returns across commercial real estate sectors, stronger income growth profiles over the long-term and are highly resilient.
“The yields achieved on the latest regional shopping centre transactions have been at or below 4.25%, demonstrating the strong demand that still exists for core assets from both domestic and offshore groups.
Scentre Group’s purchase of a half-share in Westfield Eastgardens came at a 4.25% capitalisation rate, which came shortly after QIC Global Real Estate finalised its $1 billion acquisition of 50% interests in the Werribee Plaza and Pacific Epping shopping centres.
That followed two AMP Capital funds taking on a 50% stake in the Indooroopilly Shopping Centre late in 2017 for $800 million at a sub-4.5% yield, and the Besen family selling its remaining 25% interest in Highpoint shopping centre in Melbourne’s west to GPT for $680 million, at a 4% yield.
“Prime retail will continue to perform well by attracting and retaining tenants, and investors want to be on the right side of the divergent retail theme,” MacGillivray said.
“Australia remains an attractive investment destination for foreign capital seeking stability, transparency, quality assets and transaction scale with professional management.”
The Future Fund listed a half share in Perth’s Lakeside Joondalup late last year with hope of fetching $650 million.
Australian Property Journal
