This article is from the Australian Property Journal archive
EG’s Australian Core Enhanced portfolio has surpassed $1 billion after it picked up a half share in the triple supermarket-anchored Grand Plaza sub-regional shopping centre south of Brisbane.
EG bought the stake off-market from US investment manager Invesco and joins ASX-listed Vicinity Centres as co-owner.
Located 22 kilometres from the Brisbane CBD, the Browns Plains asset at 27-49 Browns Plains Road is 97% occupied across its 53,288 sqm of gross lettable area. It features Woolworths, Coles and Aldi, together with Kmart, Big W, Target and Events Cinemas, and a recently refurbished food court.
Major, national and chain retailers represent 94% of the total lettable area and approximately 92% of the gross passing income.
The transaction was brokered by CBRE’s head of retail capital markets, Simon Rooney. He said the sale highlighted rising demand for sub-regional shopping centre investment opportunities and continued a run of retail investment activity in Queensland.
“There has been a surge in capital flows into the sub-regional sector, fuelled by a rebasing in values and rents and the attractive yields on offer compared to other asset classes,” Rooney said. The Browns Plains transaction was struck at an acquisition core capitalisation rate of close to 5.25%. BIS Oxford data showed yields for neighbourhood shopping centres had firmed below sub-regionals for the first time. Woolworths Group has just offloaded the Sapphire Marketplace on the NSW south coast to a private investor on a beefy 6.05% capitalisation rate.
Grand Plaza occupies an underutilised 181,090 sqm parcel has at-grade parking for 2,500 vehicles.
“Value can be extracted from this asset with an active asset management strategy to enhance the retail offering and tenant mix,” said EG’s head of capital transactions, Sean Fleming.
“Based on the data EG has interrogated, Grand Plaza mall is expected to benefit from the anticipated capital growth and cap rate compression across Australian retail markets in 2022.”
More than $4.5 billion worth of Queensland retail investments have traded since the beginning of last year. Several of those have been on the Gold Coast, including the Benowa Gardens shopping centre, which saw a 50% value uplift in two years, and Vicinity Centres acquiring a 50% interest in Harbour Town Outlets from a Lendlease fund for $358 million, while Pacific Fair was part of a $2.2 billion agreement entered into by UniSuper and Cbus Property.
EG’s Australian Core Enhanced Fund now owns 14 core-plus assets across Australia, eight of which were purchased in the last 12 months. They were headlined by a trio of Sydney and North Sydney office assets for $450 million, and joined by industrial sites in Melbourne and in Queensland.
“It was a case of acting quickly and intelligently when the pandemic triggered an abrupt reset of values and we identified the opportunity to grow a diversified portfolio of office, retail and industrial assets worth over $1 billion for our investors,” ACE fund manager and executive director, Chris Pak said.
EG has $5.1 billion under management on behalf of super funds and private wealth clients and $3.9 billion in its development pipeline.
