This article is from the Australian Property Journal archive
IN the commercial real estate market’s phase of price rediscovery, Lendlease and its Australian Prime Property Fund Retail (APPF) have sold the Craigieburn Central shopping centre in Melbourne’s north to active buyer IP Generation for $300 million gross.
Confirmation of the sale arrives three years after the asset was readied to go to the market before being pulled as a second wave of COVID-19 cases gripped Victoria.
The sale price excludes transaction costs and settlement adjustments.
Lendlease held 25% of the 64,837 sqm Woolworths, Coles and Aldi-anchored town centre asset, and APPF 75%. The sale furthers APPF’s selldown of assets beyond $1 billion as it looks to satisfy unitholder redemptions. Last month it launched a sales campaign Far North Queensland’s only regional shopping centre, Cairns Central, to the market and could realise about $500 million from the sale. It sold Caneland Central Shopping Centre in Mackay at the end of last year for $280 million.
On the buy side, the Craigieburn Central deal – the largest retail sale in Victoria since 2018, and the largest nationally since the end of 2021 – is IP Generation’s biggest individual shopping centre acquisition to date, growing its assets under management to $1.5 billion.
Craigieburn Central was developed by Lendlease and opened in 2013. Located in Melbourne’s northern growth corridor and servicing over 200,000 residents, Craigieburn Central generates $378 million of moving annual turnover (MAT), and centre MAT and specialty sales productivity have risen 26% and 25% respectively year-on-year.
As well as its triple supermarket offering, the centre has a Kmart, Big W and United Cinemas. The national major tenant profile accounts for 50% of centre gross lettable area and MAT with a long-term secure weighted average lease expiry (WALE) 9.8 years.
“Emerging repricing within the retail property market has provided a unique setting for nimble private equity style investors to secure core, stabilised retail assets such as Craigieburn Central on favourable pricing terms,” said IP Generation’s head of funds management, Andrew Coutts.
“We believe the acquisition presents an exceptional value proposition for IP Generation and our investors in the current economic environment.”
IP Generation believes forecast population growth, together with retail price inflation, is expected to continue to support MAT growth for the centre in the medium-term.
The acquisition also includes 76,000 sqm of surplus land surrounding the centre, which IP Generation said “presents meaningful opportunities…to unlock additional value through well-considered and master-planned mixed-use development that complements the main town centre”.
It will reportedly set up a trust that to hold the asset and aiming for an 8% annualised yield, with additional returns to come from the value-add plays.
IP Generation recently bought a 50% stake in Western Australia’s Rockingham Centre for $180 million on a core capitalisation rate of circa 7%.
The Craigieburn Central sale was managed by CBRE’s Simon Rooney.
“The sale was a highly competitive pricing outcome for APPF Retail and Lendlease, simply reflective of the attractive inherent, long term and deep value fundamentals Craigieburn Central offers, valued accordingly by proactive private capital that dominates the retail investment landscape across Australia at present.”
“The retail sector is set to benefit from migration, resilient spend in the face of already high interest rates and very low new supply in the market after a period of under-investment in the sector.”