This article is from the Australian Property Journal archive
THE GPT Shopping Centre Fund has moved to sell a half-stake in the dominant Northland Shopping Centre in Melbourne, in one of 2024’s biggest retail offerings.
Colliers’ Lachlan MacGillivray, who is marketing the asset with Simon Rooney of CBRE, told Australian Property Journal around $430 million for the 50% interest is expected, which would show a yield of around 6%.
Occupying a 19.04-hectare site, the centre features a substantial gross leasable area of approximately 98,000 sqm and is anchored by one of Victoria’s best-performing Myer stores, Target, Kmart, Coles, Woolworths, Aldi and Hoyts Cinemas, for a weighted average lease expiry by income of nearly 7.5 years.
About 60% of income is subject to annual reviews of 3% to 5%.
“A high-quality asset like this comes up very, very rarely. That’s the fundamental driver,” MacGillivray told Australian Property Journal.
“It’s a very dominant asset, it performs really well in its market – it has done for a long period of time – and you just don’t get opportunities to buy assets of this sort of quality,” he said.
“Retail just continues to outperform and in the face of a major undersupply of floor space that we’re dealing with, these are sort of assets are just going to get stronger and stronger and more and more defensive. I think people are actually seeing that first-hand now with their sales performances, and it’s giving them a lot of confidence to go and pursue these assets.”
The last transacted stake in a super-regional asset in Victoria was Pacific Werribee in 2018 at a reported cap rate of 4%.
Recent market conditions have seen a resurgence of liquidity, with $3.1 billion in key scalable transactions over the past year recorded.
“The value proposition for regional shopping centres has become increasingly compelling for investors, given the superior comparative returns on offer, rebased sustainable income profiles and robust performance fundamentals, as compared to most alternative commercial property asset classes,” Rooney said.
“The renewed investor interest in the sector is supported by robust long-term fundamentals, including limited new supply; ongoing population, jobs and wage growth; and low vacancy rates, all of which are providing strong tailwinds for the retail sector.”
Northland Shopping Centre also presents significant development potential with a masterplan for a 30-year staged development that envisions the creation of 2,300 new dwellings and 47,000 sqm of commercial office space.
Northland Shopping Centre includes the only department store in Melbourne’s northern suburbs and is unique within a seven-kilometre radius for its triple supermarket and double discount department store offerings. Mini-major and specialty tenants include Mecca, Uniqlo, H&M, Seed and Kookai, which are not represented within a 10-kilometre radius.
The centre is co-owned and managed by ASX-listed malls landlord Vicinity Centres.
Expressions of interest close in late October.
Recent major deals in the retail sector have seen HMC Capital expand its HomeCo Last Mile Retail Logistics Fund, picking up Brandon Park Shopping Centre in Melbourne’s south-east for $107 million from Chris Langford’s Newmark Capital, while Perth-based commercial property company Hawaiian take full control of Claremont Quarter, buying Queensland Investment Corporation’s half share for $207 million, and Vicinity Centres complete its purchase of a half stake in Lakeside Joondalup for $420 million from the Future Fund.
