This article is from the Australian Property Journal archive
ALTHOUGH it is shifting its focus from the retail and office sectors towards industrial, health and life sciences, fund manager ISPT continues to show confidence in non-discretionary retail by increasing its investment in Fort Street and it has plans to undertake a capital raising in the second half of this year as it eyes further opportunities.
ISPT via the ISPT Retail Australia Property Trust (IRAPT) acquired a 75% stake in Fort Street Real Estate Capital (FSREC) three years ago and a 95% stake in the FSREC Property Fund, and has increased its investment to 100% and 98%, respectively. The remaining interest in the FSREC Property Fund is held by retail investors.
FSREC owns a $700 million portfolio of 12 neighbourhood centre and sub-regional assets.
The investment underscores IRAPT’s strong performance, delivering a 8.43% return (after fees) since inception – outperforming the MSCI index of 6.58% and the MSCI retail index of 3.79% over the same period.
IRAPT has also been the best performing retail fund in the MSCI retail index over 3, 5, 7 and 10 years. The fund is heavily weighted to non-discretionary retail, with 48% of its gross rent derived from supermarkets.
ISPT group executive, head of funds management, Matthew Brown said the acquisition comes at a pivotal time for non-discretionary retail spending which increased by 4% in the 12 months to March 2024, compared to discretionary spending which fell by -0.1%, according to ABS.
“This transaction increases IRAPT’s exposure to high-quality, non-discretionary grocery anchored retail assets located in dominant catchments across Australia’s major capital cities, underpinned by our objective of investing at scale to generate sustainable risk-adjusted returns.
“Increasing our interest in Fort Street speaks to our ongoing confidence in the non-discretionary retail sector and neighbourhood shopping centres, both of which perform strongly in the face of economic headwinds as people spend their money on convenience and essentials,” he added.
Brown said the fund is well placed to raise capital in the second half of this year and continue its growth trajectory in FY25.
“The capital will be used for further acquisitions, re-developing existing assets and greenfield developments.
“Our investment in Fort Street underpins further growth of the IRAPT portfolio and demonstrates our ability to execute our retail strategy at scale at the same time as we look to actively curate our portfolio as well as unlock development opportunities at our assets. With a strong growth trajectory and a portfolio of supermarket-based retail assets, IRAPT presents high exposure to this defensible asset class for wholesale investors.” Brown concluded.
Recently ISPT put three super-prime industrial assets in Sydney and Brisbane on the market, with combined expectations of $250 million.
It is selling the Market Central Lutwyche shopping centres alongside co-owner Abacus and in October last year, it sold the Brisbane CBD home of fast fashion giants H&M and Uniqlo, 170 Queen Street for $145 million, just as it put a portfolio of four key retail assets and an office building to the market with combined expectations tipping around $600 million.
The retail assets include Melbourne’s GPO building, The Strand Melbourne, Halls Head Central and Eastgate Bondi Junction. It has since Eastgate Bondi Junction to Charter Hall for nearly $127 million, and more recently the Coles and Aldi-anchored Halls Head Central sub-regional centre for $70 million to Centuria Capital Group, at 40% below replacement cost.
In March, it put the Coles and Aldi-anchored Dee Why Grand neighbourhood centre in Sydney to the market, which could net $65 million.
