This article is from the Australian Property Journal archive
EXCLUSIVE: SHOPPING mall owner Scentre Group almost missed out on an opportunistic deal of a lifetime to buyout Dexus’ stake in Westfield Tea Tree Plaza, Australian Property Journal can reveal what really went on behind the scenes of Adelaide’s largest regional shopping centre transaction in almost five years.
The AMP Capital Shopping Centre Fund, taken over by Dexus with its acquisition of Collimate Capital’s real estate and infrastructure assets, put the 50% stake on the market in July 2023 with expectations of $350 million.
Scentre already own a 50% interest in the centre but at the time, did not make a bid for the asset.
The sale campaign by CBRE’s Simon Rooney ran its course with Scentre sitting on the sidelines.
Australian Property Journal previously reported that Chris Lock’s IP Generation had emerged as the frontrunner with a bid of $308 million but when the sale was announced late last month, the news surprised the market because the Melbourne-based group was not named as the buyer.
Industry sources this week revealed to Australian Property Journal, that Scentre almost missed the boat on the opportunity.
Despite been privy to the shopping centre’s operations and the asset’s underlying quality given it is the mall’s other half owner, sources told Australian Property Journal that it took a third-party’s bid to jolt Scentre into action.
Just how close did Scentre come to missing out?, we asked.
Sources revealed to Australian Property Journal that contracts between Dexus and IPG were already exchanged.
“IPG originated and undertook due diligence and negotiations as to the terms of the sale.
“Dexus accepted the bid and IPG had signed the sales contract and it was returned to Dexus to countersign,”
Apparently, that was the wakeup call for Scentre, which scrambled to scuffle IPG’s bid, by deciding not to waive its pre-emptive rights after all under the contract.
“Scentre decided to exercise its pre-emptive rights, and found a partner Barrenjoey, to step into the deal and matched IPG’s gross bid of $308 million.
“Due to the high-quality pricing and returns forecast for the deal, Scentre likely decided that they could not forgo such an opportunity and created their own property syndicated fund in a joint venture with Barrenjoey to buy the other 50% share,” the source said.
As reported in Australian Property Journal, Scentre teamed up with Sydney’s hottest on the scene investment bank Barrenjoey to buy Dexus’ stake.
The deal marked their first foray into funds management.
The purchase price is a discount to the December 31 2023 book value of $349.5 million, and is lower than the pre-covid book value of $400 million.
The Tea Tree Plaza deal is South Australia’s largest regional shopping centre transaction since November 2019, when Paragon REIT and MA Financial bought a 50% stake in Westfield Marion for $670 million from the Lendlease-managed Australian Prime Property Fund Retail. The plaza has a total gross lettable area of 101,052 sqm and is anchored by Myer, Big W, Kmart, Target and Harris Scarfe alongside a triple supermarket offering in Coles, Woolworths and Aldi, nine mini-majors, 201 specialty stores, a dining precinct offering 10 restaurants and a Hoyts cinema complex.
It is located in Adelaide’s growing north-eastern suburbs, approximately 15km from the CBD and draws 10.8 million customers annually, catering to a significant trade area population of over 440,253 residents, which is forecast to reach 487,795 residents by 2041.
Australian Property Journal reached out to the selling agent last week and the parties involved, however they declined to comment.
Meanwhile IPG has shrugged off the Adelaide transaction and moved onto the next deal, snapping up Stockland Glendale for $315 million this week – in the largest retail transaction of the year and the largest in the sub-regional NSW market in more than 18 years.
This is the first change of ownership for the 18.6-hectare town centre in the three decades since its development, with the centre is anchored by national tenants Kmart, Target, Coles, Woolworths and Event Cinemas.
Lachlan MacGillivray, managing director of retail capital markets at Colliers, Asia Pacific managed the transaction on Stockland’s behalf.
Stockland Glendale was the first of its kind when it was developed in 1996 and is still the fourth largest retail land holding in NSW. The sale price comes in $5 million shy of the asset’s FY23 book value of $320 million, after a $21.8 million devaluation over the period, with a cap rate of 6.25%.
IP Generation has also made major recent purchases, spending $300 million on Craigieburn Central, VIC and $180 million for a 50% interest in Rockingham Centre, WA.
