This article is from the Australian Property Journal archive
THE Lendlease-managed Australian Prime Property Fund Retail (APPF) has tipped Far North Queensland’s only regional shopping centre, Cairns Central, to the market, part of a selldown of its assets that is now extending beyond $1 billion.
APPF could realise about $500 million from the sale of Cairns Central. It sold Caneland Central Shopping Centre in Mackay at the end of last year for $280 million and is reportedly close to offloading Craigieburn Central in Melbourne to funds house IP Generation, as it looks to satisfy unitholder redemptions.
Cairns Central is anchored by Myer, Kmart, Target, Coles, Woolworths and Event Cinemas, and is one of Australia’s top-performing malls, bringing in $492 million in total sales across its 186 tenants each year.
Major tenants report a combined $198 million in yearly sales and have a weighted average lease expiry of 6.3 years by gross lettable area and 6.1 years by income. Other drawcard retailers include City Beach, Daiso, iPlay Australia, Rebel, Best & Less, Terry White Chemmart and JB Hi-Fi.
The centre has a gross lettable area of 51,972 sqm and occupies a 9.4-hectare site that is directly connected to Cairns railway station.
Colliers’ Lachlan MacGillivray and McVay Real Estate’s Sam McVay have the listing.
MacGillivray said a100% interest in a regional shopping centre with management rights is seldom offered to market, with only two sales recorded since 2015.
“Cairns Central is the best quality asset to hit the market in recent times against a backdrop of capital refocusing attention on ultra-defensive and dominant assets.
“Unlike other periods of economic uncertainty, there is no deficiency of capital in the market and quality assets located in strong locations like Cairns Central continue to source high demand.”
McVay said the centre represents “one of the most secure and defensive income streams in Australia”, with specialty occupancy costs of 12.3% and productivity of $14,122 per sqm.
Cairns Central was ranked as the number one centre in Queensland in the Shopping Centre News’ “Big Guns” report for 2020, based on moving annual turnover (MAT) per sqm, which also placed it 14th in Australia. Major tenants and specialties are outperforming the 2022 Urbis “All Regional” Shopping Centres Benchmark on an MAT per sqm basis by 31% and 46% respectively.
Cap rates across the retail sector are nearly 150 basis points higher than a year ago, figures from research collective the PAR Group show. Total transactions in the market for the three months to February have started to edge higher, hitting $585.5 million, but remain nearly 40% below the levels of the same period a year earlier as the broader market experiences a slowdown in deal-making.
In Australian Property Journal’s most recent edition of “Talking Property”, MSCI’s head of real estate research, Pacific, Benjamin Martin-Henry said conditions in the retail sector are currently asset-specific and sub-type specific.
“The big shopping centres aren’t really selling because (with) sellers – no way will they get what they want for them, because there’s not the appetite out there.”
APPF’s sale of Caneland Shopping Centre had initially shaped up to top $300 million.
Domestic visitor numbers to Tropical North Queensland are up 27% compared to pre-COVID and international travellers are only starting to rebound, which is expected to provide a boost for the centre given the region’s position close to several World Heritage Listed areas including the Great Barrier Reef, the Wet Tropics and Riversleigh.
Cairns airport passenger movements expected to exceed pre-COVID levels by 2026, and retail spending from tourism is forecast to increase by 10.8% per annum until then.
Expressions of interest for Cairns Central close Thursday, 20th April.
