This article is from the Australian Property Journal archive
ACTIVITY in Australia’s retail sector continues to ramp up with MA Financial putting an Adelaide sub-regional shopping centre on the market with big price expectations in excess of $130 million.
Anchored by Woolworths, ALDI, Romeo’s Foodland, Big W, Harris Scarfe and Hoyts Cinemas, Arndale Shopping Centre at 470 Torrens Road is located around 7.5km from the Adelaide CBD and is one of the largest sub-regional shopping centres in the northwest Adelaide Metropolitan area.
Specialty tenants comprise a post office, pharmacies, banking services, community services, bakeries and coffee shops, in addition to discretionary retailers. The asset boasts a majors WALE of 7.03-years by area and 7.44-years by income, with total MAT reaching $198.3 million in June 2024, and an annual foot traffic of 5.3 million.
Lachlan MacGillivray from Colliers, alongside Matthew Lane of Dulwich Lane have been appointed to sell the centre, on behalf of MA Financial.
“Sub-regional shopping centres are in incredibly high demand, with buyers attracted to the strong underlying fundamentals and resilient performance offered,” said MacGillivray, managing director of retail capital markets at Colliers, Asia Pacific.
“Arndale Shopping Centre has benefitted from significant expenditure in excess of $25 million since 2017, to meet the needs of its growing and gentrifying customer base. The high-profile site also provides a wide-range of further value-add opportunities, including the introduction of an external dining precinct.”
Arndale Shopping Centre occupies a 10.7-hectare site and boasts a low site coverage of just 37.1%, leaving plenty of development and value add potential. Additionally, the site benefits from excellent accessibility from the surrounding suburbs, with 1,916 car bays and a bus interchange directly outside.
Lane said Adelaide offers an attractive yield spread relative to the capital cities in the eastern seaboard.
“The stamp duty exemption allows for a saving in acquisition costs, reflecting a comparatively higher core capitalisation rate to equivalent interstate transactions and combined with Adelaide’s strong economic fundaments is making it an attractive investment destination.”
The centre is located 7.5 kilometres from the Adelaide CBD and offers car parking of 1,916 car bays, as well as the bus interchange located directly outside.
The trade total area (TTA) population is estimated at 293,001 in 2024, and the TTA retail spend is expected to grow from $4.84 billion in 2024 to $7.18 billion by 2036, an average growth rate of 3.3% per annum.
Expressions of interest close Thursday, 29th August.
Retail revival
Shopping centre fundamentals are “generally positive” and “it appears investors are waking up to the positive story”, according to Dexus. Vacancies have held steady, despite the weak sales environment, with occupancy costs lower than prior to the pandemic, and amid a lack of new shopping centre supply.
Over the past year, the discount to net asset value for listed retail REITs in Australia has narrowed from 13% to 3%.
MA Financial’s listing comes as Scentre Group and Sydney’s Barrenjoey bought Adelaide’s Westfield Tea Tree Plaza from Dexus.
Chris Lock’s IP Generation was a contender for Tea Tree but missed out after Scentre exercised its rights. IPG went on to spend $315 million on 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.
