This article is from the Australian Property Journal archive
THE outperformance of large format retail during the pandemic has lured QIC to Craigieburn Junction in Melbourne’s north, with the funds manager forking out $135 million for the homemaker centre.
The deal was struck on a yield of 5.4%, an attractive return at a time in which office cap rates are coming off low bases and east coast industrial yields hit record lows of sub-4.0% amid the e-commerce boom.
The 25,086 sqm centre will be held in the core-plus QIC Active Retail Portfolio Fund, owing to the added value opportunities afforded by the low coverage on the 6.13-hectare site.
Craigieburn Junction was put to the market by PGIM Real Estate in July, two years after it took on the centre in a $100 million fund-through deal with developer Oreana Property Group.
Tenants at the centre currently include Nick Scali, Supercheap Auto, Freedom, Caltex, Hungry Jacks, a medical centre, a childcare centre and supermarket.
Charles Occhinno, QIC’s fund manager in charge of core plus strategies, said, “The acquisition of this defensive retail asset showcases QIC’s conviction in the core-plus real estate asset class, and is a fitting addition to QIC’s established, high-quality $1.1 billion core-plus portfolio, consisting of a diversified exposure in defensive retail, industrial and office assets”.
Investment activity in the large format retail sub-sector increased by 79% for the first half of the year, compared to the same period in 2020, according to selling agents JLL.
QIC was on the sell side of a Melbourne large format retail centre transaction in the area earlier this year. It divested the Watergardens Homeplace in Taylors Lakes in the north western suburbs for $97 million to Harvey Norman, on a yield of about 4.75%, at the same time it sold the Robina Home +Life complex on the Gold Coast to Primewest for $66 million. Both assets were deemed non-core.
Major large-format deals have also included IOOF making its first property acquisition in the well-performing sector, paying $68 million for the brand new Great Western Centre in Sydney’s Minchinbury, while the HomeCo Daily Needs REIT this week spent $222 million on six assets, including large format centres in Melbourne’s south east, Coffs Harbour and Lismore.
Large format centres combined with neighbourhood and convenience centres to push rolling quarterly retail transaction volumes to a 230% year-on-year increase nationally.
