This article is from the Australian Property Journal archive
ASX-listed Vicinity Centres has offloaded Dianella Plaza in Perth’s northern suburbs for $76.25 million to active local funds manager Greenpool Capital to close out 2023, in a deal that brought retail investment activity in Western Australia for 2023 to about $850 million.
Located eight kilometres from the CBD, the 17,138 sqm, food, service and convenience-based neighbourhood centre is anchored by Woolworths and Coles, The Reject Shop, 54 specialties and kiosks, three ATMs and six pad sites.
The transaction was struck at a $4.25 million premium to Vicinity Centres’ June book value, reflecting a 6.75% core cap, passing yield of 6.65% and a fully leased yield of 7.38%.
CBRE’s Simon Rooney and James Douglas managed the off-market sale campaign.
Dianella Plaza is the fourth retail acquisition for the expanding Greenpool Capital, amassing $468 million in acquisitions since 2021, its most recent purchase being Forest Lakes Shopping Centre for $81.5 million in July of 2022, to go with North Adelaide Village for $50 million and Runaway Bay Shopping Centre in Queensland at $260 million. All sold through by CBRE.
“Dianella Plaza continues our strong investment strategy of focusing on non-discretionary based centres that are land-rich and capable of significant value-add,” said Greenpool Capital’s managing director, Brad Osborne.
Dianella Plaza is 95% occupied and generates a growing annual turnover of $123.4 million. Specialty productivity at $7,632sqm is in line with industry benchmarks coupled with the Plaza’s highly specialty GOC of 12.4%. The centre is on a strategic 79,250 sqm site at the corner of Grand Promenade and Alexander Drive, including 17,735 sqm of adjoining land, and provides car parking for 934 vehicles.
The centre was acquired for the Greenpool Value-Add Fund No. 2. Taking advantage of the underutilised land, Greenpool has plans to introduce a range of income-orientated and residential-based mixed uses to the Centre.
WA comes in third nationally for retail sales in 2023
Western Australia’s total retail investment number had it in third highest within Australia, according to CBRE data, behind Victoria at $1.3 billion and Queensland at $1.2 billion. The recent $465 million sale of Midland Gate to Fawkner Property and PAG in October was the largest retail transaction in both the state and Australia in 2023.
“Despite recent interest rate increases, the sub $100 million retail centre market has continued to increase in buyer depth, demand and overall transaction volumes in 2023, dominated by private capital and attracted by compelling returns, adjusted values and robust underlying trading performance,” Rooney said.
“The overall outlook for retail property is positive both from an owner and investor standpoint. Rents and values have gone through a recalibration coming out of COVID, with minimal recent or forecast supply and corresponding increased demand, an expanding buyer pool and increased liquidity, allowing owners to streamline and reposition portfolios and investors securing access to historically tightly held high-quality assets.”
Vicinity’s divestment follows the ASX-listed landlord grabbing back the other half-share in Sydney’s Chatswood Chase for $307 million – some $255 million less than what it sold it for six years ago – with plans to press ahead with its redevelopment as it optimises its portfolio.
Shopping centre sales pick up in pre-Christmas rush
Shopping centre sales have been starting to pick up amid the pre-Christmas rush, according to The Data App, albeit off a very low base. The bulk of transactions have been for neighbourhood shopping centres such as Torquay Village, which sold for around $50 million. The research firm’s director, Rob Ellis, said there are “few signs yet that a meaningful upswing is unfolding”.
The retail sector has just seen fund manager Fawkner Property add to its run of major shopping mall purchases with the $390 million acquisition of Cairns Central in far north Queensland.
The Cairns Central deal comes hot on the heels of Charter Hall Retail REIT offloading $225.5 million worth of shopping centres in Adelaide’s Morphett Vale and Rosebud, on the edge of Melbourne, in line with book valuations, and property fund manager Haben taking full control of the Stockland Townsville shopping centre, acquiring the remaining half-stake and management rights for $123.5 million. The price is a 9.5% discount the June book valuation, and the deal follows Haben picking up an initial half stake in September for $115 million, at an 11.5% discount.
Both stakes were bought on yields of about 8%.
