This article is from the Australian Property Journal archive
EXCLUSIVE: IT has been long time between drinks for Perth’s large format retail (LFR) sector, but US global asset manager Barings is poised to quench that thirst with the sub-sector’s largest deal of the year, as commercial real estate transactions continue to gain momentum in Western Australia.
Industry sources have told Australian Property Journal that Barings, the Charlotte, North Carolina-based investment manager owned by the Massachusetts Mutual Life Insurance Company (MassMutual), is in due diligence to acquire the homemaker centre, Joondalup Square.
Joondalup Square was put on the market for the first time in September this year, in a campaign managed by Colliers’ James Wilson and Cygnet West’s Wayne Lawrence.
Developed by Arise Developments in 2013, the centre features a total lettable area of 13,216 sqm spread across three freestanding single-level buildings, with a combined area of 27,598 sqm. There are 14 LFR tenants and five specialty stores including Amart Furniture, Beacon Lighting, PetO, Bedshed, Kitchen Warehouse, Forty Winks, Adore Home Living, and Barbeques Galore.
The centre offers at-grade parking with 352 car bays and benefits directly from the foot traffic generated by the adjacent Bunnings.
Joondalup Square is strategically positioned to capitalise on its expansive trade area that encompasses Joondalup and the surrounding suburbs in northern Perth. The catchment extends 45 kilometres to the north and 10 kilometres to the south, and the rapidly-growing population is projected to reach 564,264 residents by 2041.
This transaction was previously mooted by Australian Property Journal.
Industry sources said Barings made an acceptable offer of approximately $80 million for the asset during the expressions of interest campaign, and emerged as the lead, entering due diligence for the acquisition.
The US giant is poised to complete the acquisition shortly.
Once this acquisition is made official, it will be the largest LFR sale in Perth this year, and coming 13 months after HomeCo Daily Needs REIT’s sale of HomeCo Midland to Banjo Bond’s Cosgrove Group, formerly PWD, for $75 million.
Joondalup Square is only the second capital city LFR centre to be publicly marketed in 2024, and Western Australia has experienced only two LFR deals since the beginning of 2023.
Joondalup Square will also be the largest LFR sale across Australia, eclipsing Banjo Bond’s acquisition of Warners Bay in NSW in October this year for $56.5 million and The Bayview Centre in Warrawong, which was acquired for $57 million by MLC Asset Management from The Griffith Group, on a 5.75% capitalisation rate.
The LFR sector remains a tightly-held asset class nationally with select transactions this year, with the HomeCo Daily Needs REIT a prominent player. Aside from Warners Bay, other recent sales have seen HomeCo Daily Needs REIT’s $54 million off-market divestment of HomeCo Ballarat in regional Victoria, while ASX-listed BWP Trust offloaded a commercial site former Bunnings Warehouse in Lake Macquarie for $20.5 million.
Commercial real estate investor Whitmore Property is launching a new LFR fund that is targeting $150 million in assets tenanted by household brands including Supercheap Auto, The Good Guys and Subway.
WA finishing 2024 with a rush
Australian Property Journal also reported that some $350 million worth of commercial real estate transactions are set to close in Western Australia by the end of this year. As exclusively reported by Australian Property Journal in recent weeks, the market was boosted with Andrew Roberts’ RF Corval selling 66 St Georges Terrace to Perth-based Oceania Capital for $75 million.
That office sale was quickly followed by the ISPT Retail Australia Property Trust (IRAPT) acquiring the Woolworths Clarkson, located 35 kilometres north of Perth in the City of Wanneroo, for $36 million. Colliers’ James Wilson also handled this sale with colleague Richard Cash.
According to Colliers investment volumes in Western Australia have reached $1.3 billion across the office, industrial, and retail sectors in 2024 year-to-date.
Notably, 10% of all sales nationally were in Western Australia, the report showed – the highest proportion of capital represented by the state in the past decade.
Major deals in the state this year saw Vicinity Centres nab a 50% stake in Lakeside Joondalup for $420 million – at a hefty discount to the asset’s peak value – while Hawaiian took full control of Claremont Quarter.
JY Group also paid $195 million for a half-stake in Westfield Whitford City from Singaporean sovereign wealth fund GIC after Scentre Group opted against taking full control of the Perth asset.
