This article is from the Australian Property Journal archive
THE Dexus Wholesale Property Fund and acquisitive Melbourne-based fund manager Fawkner have confirmed their $212 million deal to trade Willows Shopping Centre in Townsville, in the sunshine state’s biggest retail transaction of 2024 so far.
Managed by Dexus and owned by its wholesale fund, the 44,507 sqm sub-regional centre underwent an $80 million refurbishment and expansion in 2015, and includes a new fresh food precinct. With Coles, Woolworths and Townsville’s first Aldi, it is the only triple supermarket offering in northern Queensland.
The centre generates over $360 million in moving annual turnover and also includes Big W, Rebel, TK Maxx, JB-Hi-Fi, Cotton On and 107 specialty shops.
The sale, struck around book value and on a circa 8% yield, was brokered on behalf of Dexus by Nick Willis and Sam Hatcher from JLL together with Jonathan Fox and Carl Molony from Stonebridge, while CBRE’s Simon Rooney represented Fawkner Property in the negotiations.
The acquisition is a quick return to northern Queensland for Fawkner, after its $390 million purchase of Cairns Central at the end of last year.
“This is a strategic acquisition, which extends our foothold in central and Far North Queensland and will allow us to capitalise on the synergies of owning a high-quality retail portfolio in a fast-growing market,” said Fawkner Property founder Chris Garnaut.
It has now purchased 11 retail assets totalling $2.1 billion since 2021. Last year it spent $465 million buying Perth’s Midland Gate shopping centre in partnership with Hong Kong-based PAG. Earlier this year, it bought Stockland Nowra on the NSW South Coast for $103 million.
The Willows Shopping Centre deal comes as transaction volumes for sub-regional centres track at almost $1.2 billion year-to-date in 2024, trailing some 55% below the three-year average for the sub-sector.
“The reduction in transaction volumes is being attributed to the limited availability of investment supply as fundamentals of the retail asset class continues to improve,” Hatcher said.
Willis said there has been a notable increase in capital demand for retail, with the majority of investors returning to the sector engaging in the sub-regional asset class given the available returns and the land-rich nature of these centres.
Willows Shopping Centre is on a 15.39-hectare site and has an additional development parcel of 4.42 hectares.
After more than half a decade of repricing and challenging fundamentals, the retail property sector is looking compelling on a relative value basis, according to Dexus, with yield expansion milder than other core commercial property markets, and “investors are waking up to the positive story”.
Rooney said the re-entry of offshore and now domestic institutional investors into the sub-regional and regional shopping centre sector has been due to the compelling returns on offer.
“This should translate into increased retail sale volumes as we close out 2024 and continue into 2025.”
ASX-listed malls owner Vicinity Centres has just nabbed a half stake in Lakeside Joondalup for $420 million from the Future Fund – at a hefty discount the asking price all the way back in 2018 – while its major rival Scentre Group has recently paired with Barrenjoey to double-dup in Adelaide, buying Dexus’ 50% stake in Westfield Tea Tree Plaza in Adelaide for $308 million, and then a half interest in Westfield West Lakes for $167.30 million.
Molony said interest for Willows Shopping Centre came predominantly from local managers who were attracted to the opportunity to secure a 100% interest control in a dominant sub-regional, as well as high-net-worth investors.
Fox said the centre being home to the only Aldi in Townsville was a key point of difference.
