This article is from the Australian Property Journal archive
FORTIUS has partnered with ASX-listed Irongate for the $210 million acquisition of Adelaide’s headline retail asset Rundle Place, within the CBD’s major shopping precinct of Rundle Mall, bringing to an end nearly four years of vendor Blackstone’s attempts to divest the complex.
Sydney-based Fortius has been tapping investors for funds since last winter for its acquisition of the four-level centre from the US private equity giant. The sale price represents a passing yield of circa 5.5%.
Irongate, through its Irongate Templewater Australia Property Fund, has stepped in as anchor investor “recognising the rare opportunity to acquire a prime asset at below land and replacement cost”, it said.
Rundle Place is home to South Australia’s only Apple store, the Adelaide City Library, a full-line Coles supermarket, and more than 50 specialty shops. It is now one of the few major retail assets to change hands since the beginning of COVID.
As part of the deal, Fortius has secured the adjoining strong-performing Grenfell Street Carpark on a current passing income of 5.8%. It features 500 car spaces over seven levels and directly integrates with the four-level retail centre.
“The acquisition demonstrates our confidence of the value proposition in this transaction and we’ll again roll the sleeves up to achieve our vision,” Sam Sproats, Fortius chief executive said, adding that they would aim to “revitalise the tenant mix and introduce leading national and international brands to Adelaide”.
“There is resilience in the retail sector and it’s bouncing back quickly, supported by an overwhelming amount of investor interest we have received.”
Graeme Katz, Irongate chief executive, said its wholesale funds management program “allows us to take advantage of these kind of deep value opportunities”.
Developed in 2013 by Hansen Yuncken for Pacific Shopping Centres, Rundle Place was acquired by Blackstone in 2016 in a $400 million package deal with the adjacent 80 Grenfell Street office tower – the headquarters of Bendigo Bank.
The Rundle Place package had been part of a 10-asset portfolio that Blackstone offered to the market in 2017, before it pulled the plug on the mega-offer, and then sold 80 Grenfell Street to Centuria Capital and the Lederer Group for $184.6 million in 2018.
Blackstone tried its luck again with the asset early in 2019, putting it to the market through McVay Real Estate and Knight Frank who struck the eventual transaction.
Sales in Rundle Mall have been scarce in recent years. Con Makris’ $60 million divestment of the City Cross shopping centre over summer was among the few deals, while a unique six level retail and student accommodation building at 133 Rundle Mall is heading to auction next month.
McVay Real Estate’s Sam McVay said Adelaide is realising notable growth which is appealing to investors.
“The city is witnessing a substantial increase in institutional interest off the back of a $5 billion government project spend, zero stamp duty regime and rapidly developing CBD.
“This transaction is evidence of the increasing levels of investor demand for high quality retail assets in locations with strong fundamentals such as Adelaide.” McVay concluded.
