This article is from the Australian Property Journal archive
PROPERTY fund manager Primewest has done some last-minute shopping, acquiring Melbourne Square for $70 million in the largest neighbourhood centre transaction in Victoria in 2020.
The transaction reflects an equivalent yield of 4.73%.
The off-market transaction was negotiated by JLL’s Stuart Taylor, Tom Noonan and Sam Hatcher on behalf of Yarra Park City Pty Ltd, the joint venture partnership Malaysian developer OSK Group and the country’s pension fund Employees Provident Fund (EPF).
The Woolworths anchored shopping centre is being acquired on behalf of the unlisted Daily Needs Retail Trust.
The Melbourne Square shopping centre, forms part of OSK’s master planned mixed-use project consisting of six towers across a 2-hectare site including 3,745 of open space parkland. The first stage of which the shopping centre forms part, includes two towers with over 1,000 apartments. The further stages include a 600 room Hilton Hotel and convention centre, an office tower of circa 40,000 sqm and two additional residential towers.
The centre is anchored by a two-level Woolworths supermarket, the first full-line supermarket in the Southbank area and the first two-level major supermarket in Victoria. Set to open this month, the centre also comprises a BWS liquor store, five specialty stores, an 87-place childcare centre and 120 car spaces on title.
The asset provided a new 15-year lease to Woolworths, a 20-year lease to Think Childcare and an asset WALE of 13.87 years (by income).
Taylor said this transaction further affirms the strong demand for defensive retail assets which are underpinned by non-discretionary tenants.
“The sale reflects the largest neighbourhood centre transaction in Victoria in 2020, and sets new benchmark pricing in the sector.
“Woolworths will deliver critical amenity to the inner-city suburb that is experiencing rapid population growth, the trading performance potential of the asset is genuinely exciting, with Southbank’s population expected to exceed 53,000 by 2041, a 97 per cent increase on the current population” Taylor added.
CEO of Yarra Park City Chong Boon Woon said the sale is a strong outcome for our stakeholders, but also for the current and future residents of Melbourne Square and the broader Southbank area.
“Primewest have a strong track record of managing prime retail such as this, and we have full confidence they will continue to deliver world-class amenity and retail offering to the precinct,” Chon said.
Primewest executive chairman John Bond said the recently launched Daily Needs Trust at the height of the COVID pandemic has already purchased of the Spring Farm shopping centre south of Sydney, followed by two Woolworths-anchored centres in Pemulwuy and West Ryde, NSW, acquired from Charter Hall.
“We are delighted to have secured Melbourne Square as a “trophy” asset, with the Woolworths store forecast to trade extremely well due to the intensive residential development in the area as well as the flow on effect from the surrounding entertainment, commercial and university campus amenities.
“The ongoing development and other growth at Southbank will ensure strong population growth for several years, despite the current challenging environment,”
Bond said the Daily Needs Trust was formed under a long and mutually beneficial institutional mandate Primewest has in place, with a total investment so far of $230 million and plans to acquire substantially more.
He said the trust structure was consistent with the company’s long-term aim to build its network of institutional investors.
