This article is from the Australian Property Journal archive
FUND manager Trilogy Funds has taken its first steps into the large format retail and convenience retail asset classes, picking up a $220 million portfolio of property income funds linked with Eildon Capital Group.
The assets are located in growth corridors and include the newly opened $80 million Harpley Town Centre at Werribee in south-west Melbourne, the $58 million Caboolture Junction shopping centre north of Brisbane, the $19 million BMW dealership in Berwick, south-east of Melbourne and the $64 million neighbourhood shopping centre Elara Village at Marsden Park, in north-west Sydney.
They are mainly large A-grade centres anchored by large national or international tenants.
“These assets have been constructed under a develop-to-own model in high-density and strategic locations with the aim to provide both capital upside to investors undertaking this development while securing tenants with strong covenants within a centre anchored by a major retailer like Coles,” said Trilogy Funds executive director Henry Elgood.
“Large-format and convenience retail have proved to be resilient and defensive assets and historically less volatile relative to other sectors, given the predominantly non-discretionary nature of their underlying tenant cashflows.
“The sector is continuing to see strong tailwinds, with a combination of factors such as rapid population growth, a shift to convenient, quick-access shopping, and healthy rental growth across the asset class.”
The acquisitions included the management rights in four and co-investment stakes in three property trusts, all previously managed by various entities affiliated with Eildon Capital Group.
It takes Trilogy Funds’ overall portfolio of funds under management to more than $1.4 billion across its unlisted property, real estate credit, and diversified income funds. Last month it acquired a Geelong distribution centre leased to global surf apparel brand Quiksilver, which followed the $29 million purchase of a warehouse and showroom in Brendale.
Elgood said the large format retail acquisition enables Trilogy Funds to diversify its overall portfolio into an asset class with solid fundamentals, strong growth potential and increasing investor demand.
He said Trilogy Funds also saw potential for further tenant-led developments in the large-format retail and convenience sectors.
Following completion of the transaction, property industry veteran Laurence Parisi who recently joined Trilogy Funds from Eildon Capital will oversee the portfolio and asset management of these assets, in addition to Trilogy’s existing direct industrial property platform.
Parisi said Trilogy Funds is optimistic about equity opportunities in industrial, convenience retail and large-format retail asset classes over the next 12 months, with several compelling acquisition opportunities currently under review.
“There continues to be underlying demand from our investor base for commercial property opportunities across the industrial and retail sectors, with a particular focus on assets with strong tenant-led development opportunities.”
HMC Capital has just expanded 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 commercial real estate investor Whitmore Property is launching a new large format retail fund that is targeting $150 million in assets tenanted by household brands including Supercheap Auto, The Good Guys and Subway.
HMC Capital’s spin-off HomeCo Daily Needs REIT recently offloaded the HomeCo Ballarat large format complex for $54 million.
