This article is from the Australian Property Journal archive
SCENTRE Group’s newly minted partnership with investment bank Barrenjoey has doubled-dipped in Adelaide, just as Elanor Investors Group puts NSW Mid North Coast sub-regional shopping centre Manning Mall up for sale as liquidity returns to the retail market.
Hot on the heels of the acquisition of the acquisition of Westfield Tea Tree Plaza last month, the Scentre and Barrenjoey JV have returned to Adelaide and acquired a 50% stake in Westfield West Lakes for $167.30 million. The sale price represents a 10% discount to the centre’s book value as at June 30 but 36% below the peak value of $260 million.
Located 12kms north-west of the Adelaide CBD, the centre comprises a gross lettable area of 71,516 sqm. It is home to David Jones, Kmart, Target, Coles and Woolworths. There is a Reading Cinemas complex on site and a mix of more than 220 specialty stores, boasting annual sales of $471 million. There are also 3,909 car parks.
The centre caters to a main trade area population in excess of 219,000 residents with a total annual retail spend per capita estimated at $15,895 per annum in 2023, which is broadly in line with the Adelaide Metro average ($15,757).
The surprise acquisition indicates Scentre has woken up to the positive story in shopping centres, after a near miss scare at Tea Tree Plaza, which has jolted the group.
Meanwhile Elanor’s Coles-anchored Taree centre is expected to attract interest from syndicators and funds attracted to risk-adjusted returns with the ability to reposition the asset, according to listing agents James Wilson and Ben Wilkinson of Colliers, at a price point north of $35 million.
The single-level Manning Mall is on a 29,740 sqm site at 81 Manning Street and has 10,723 sqm in gross floor area and is also anchored by Target, and supported by four mini majors, 23 Specialties, three kiosks, and one ATM. Taree is 320 kilometres north of Sydney via the M1 Pacific Motorway and Manning Mall serves as a central retail destination within the region.
Elanor head of retail, development and mixed-use, Matt Healy told Australian Property Journal that Elanor is divesting Manning Mall as part of a strategic divestment campaign of the Elanor Property Income Fund.
“This asset has been positioned for sale with Elanor optimising the asset’s value,” he said.
Wilson said the centre marks the first NSW non-metro sub-regional shopping centre to be publicly marketed in 2024, “helping to alleviate pent-up demand from investors looking to acquire an asset that provides wealth creation and preservation, compared to other asset classes”.
Manning Mall is 97% occupied and has a weighted average lease expiry of more than five years. Some 75% by area is leased to national tenants, and Coles is trading at a sub-3% occupancy cost. Wilkinson said there is strong value-add potential and the ability for positive rental reversion, with average specialty rents being 29% below Urbis benchmark.
Development upside lies with the low site coverage of 36%, floor-space ratio of 2:1 and a maximum height allowance of 8.5 metres, under E2 local centre zoning.
The centre has 422 on-grade car spaces on title at 3.9 spaces per 100 sqm of gross area, alongside significant frontage to Manning Street, allowing potential for creation of external QSR pad sites.
Expressions of interest close 28th August.
Elanor has put the offering to the market soon after winning concept approval for its $900 million redevelopment plans for the 1982-built Tweed Mall Shopping Centre in Tweed Heads. Its five-hectare master plan includes 45,000 sqm of retail space, cinema, gym, childcare centre, medical centre, around 1,400 apartments and townhouses, 14,000 sqm of office space and a 52-key hotel.
Elsewhere in its portfolio, Elanor has just teamed up with PGIM Real Estate for one of the largest industrial sector deals of 2024, in which they acquired a 19-hectare Woolworths storage facility site in south-east Melbourne that they will transform into a 113,000 sqm logistics estate.
It has also launched a second healthcare real estate, seeded by the medical centre at Sydney’s Royal Prince Alfred Hospital.
Retail revival
According to ASX-listed Dexus, shopping centre fundamentals are “generally positive” and “it appears investors are waking up to the positive story”. Despite a weak sales environment, vacancies have held steady, while occupancy costs are lower than prior to the pandemic. There is also a lack of new shopping centre supply, but buyers and sellers are beginning to cut deals again.
Over the past year, the discount to net asset value for listed retail REITs in Australia has narrowed from 13% to 3%.
This week, MA Financial put Adelaide sub-regional mall Arndale Shopping Centre to the market with expectations of more than $130 million.
Last month IG Generation forked out $315 million for Stockland Glendale, in the largest retail transaction of the year and the largest in the sub-regional NSW market in more than 18 years. IPG has been an early mover in recognising the retail sector’s positive story, several recent shopping centre deals, it also spent $300 million on Craigieburn Central, VIC and $180 million for a 50% interest in Rockingham Centre, WA. While netting $35 million from the sale of Richmond Mall in May.
But not all investors share the same outlook on retail. ISPT has continued its pivot from retail towards the health and life sciences sectors, offloading Dee Why Grand shopping centre in Sydney’s Northern Beaches for $60 million to a high-net-worth private investor, while Vinta has put up the for sale sign at The Strand at Coolangatta, perched between the surf breaks of Snapper Rocks and Kirra, offering Australia’s widest beachfront retail holding.
That came little more than a week after ISPT’s Core Fund lobbed a 50% stake in sub-regional centre Warriewood Square, also in the Northern Beaches, to the market. The centre received an $87 million upgrade in 2016.
ISPT has also been shopping around the triple-supermarket anchored Market Central Lutwyche, alongside co-owner Abacus, five years after the centre underwent a $77 million redevelopment.
Other recent deals have included ASX-listed Vicinity Centres selling off Maddington Central in Perth for $107 million, at a 10% uplift to book value, whilst back in April, Centuria Capital bought the Halls Head Central sub-regional centre from ISPT for $70 million, which was 40% below replacement cost. Charter Hall acquired Eastgate Bondi Junction in February for nearly $127 million. ISPT also sold the Brisbane home of fast fashion giants H&M and Uniqlo for $145 million.
