This article is from the Australian Property Journal archive
LEND Lease has put five dominant sub-regional shopping centres in New South Wales and Western Australia worth around $500 million on the market.
The Lend Lease Real Estate Partners 3 portfolio is the largest retail offering this year and it is expected to attract significant interest from domestic and offshore players.
JLL’s Simon Rooney and Macquarie Capital’s Antony Green have been jointly appointed to advise on the sale.
Rooney said there is currently strong market appetite for portfolios of this scale.
“Such a high quality portfolio coming to market presents a rare opportunity, especially in the sought after retail sector. Larger portfolios enable investors to build scale and a management platform quickly and efficiently in a market where prime investment opportunities are becoming increasingly scarce.
“Many significant investor mandates remain unsatisfied. We are seeing consistent sentiment from these parties who are seeking to buy in the current cycle,” he added.
Recent JLL sub-regional deals include ISPT’s acquisition of Bendigo Marketplace in NSW in December 2013 for $165 million; Woolworths’ current $200 million sale process for Brickworks in SA & Warnervale Marketplace in NSW; AMP Capital’s sale of Riverside Plaza to Colonial (CERF) for an undisclosed price; The disposal of Sturt Mall, Wagga Wagga from Local Government Super to DWPF for $61.2 million; DWPF’s acquisition of Deepwater Plaza, Woy Woy, for $98.5 million; and Adelaide’s Golden Grove acquired by Challenger Life Co. for $129.1 million.
Green expects the portfolio to be one of the most highly contested retail investments in Australia this year.
Two centres are in NSW, Menai Marketplace in Sydney’s south and Settlement City in Port Macquarie. Whilst three are in WA, Armadale Shopping City south-west of Perth, Southlands Boulevarde south of Perth and Northgate shopping centre in Geraldton.
The largest by GLA is Armadale Shopping City (31,666 sqm) on a 65,847 sqm site. The centre is 95.7% occupied and is anchored by Kmart-, Target, Coles supermarket and Supa IGA.
It is followed by Southlands Boulevarde, a 21,451 sqm centre on a 60,899 sqm site, which has a 99.1% occupancy rate and anchored by a Woolworths and Coles supermarkets. Meanwhile Northgate shopping centre comprises GLA of 15,916 sqm on a 36,845 sqm site. It is 97.6% occupied and tenants include Target and Coles supermarkets.
In NSW, the Settlement City centre comprises 19,216 sqm GLA on 48,891 sqm site and has an occupancy rate of 98.9%. Finally Menai Marketplace comprises 16,652 sqm GLA on 52,450 sqm site and is fully leased.
JLL Research shows investment in the sub-regional shopping centre sector has been steadily rising with transactions in 2013 reaching a record high of $1.8 billion, above the previous record of $1.2 billion in 1997.
Rooney said yields on these centres remain attractive and the results achieved on recent sales show that growing competition for sub-regional assets is beginning to drive yield compression for quality assets and there remains significant scope for further compression.
JLL Research shows the average sub-regional yield (Q2) for Australia currently sits at 7.54%, still 16 basis points above the 10-year long term average.
The EOI campaign closes on Thursday 4 September 2014.
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