This article is from the Australian Property Journal archive
SENSING that the window to seize opportunities is closing, Scentre Group and Sydney’s hottest on the scene investment bank Barrenjoey have joined forces to buy Dexus’ stake in Adelaide’s Westfield Tea Tree Plaza for $308 million.
Scentre is already a half owner of the shopping centre, and its Barrenjoey JV acquired the property after exercising their pre-emptive rights to buy the asset.
According to industry sources, the JV blindsided Melbourne’s IP Generation’s, which was the top bidder with $298 million.
Industry sources told Australian Property Journal that Chris Lock’s group had already exchanged contracts on the centre.
But the purchase price was still a discount to the December 31 2023 book value of $349.5 million.
Scentre and Barrenjoey have stepped into the Westfield Tea Tree transaction under a preemptive agreement, marking their first foray into funds management.
CBRE’s head of retail capital markets – Pacific, Simon Rooney exclusively negotiated the deal on behalf of the Dexus Wholesale Shopping Centre Fund, formerly AMP Capital Shopping Centre Fund, after acquiring the real estate and domestic infrastructure equity business last year.
The deal has taken almost 12 months to materialise after Dexus put the property on the market in July last year, with a price tag of around $350 million which was lower the pre-covid book value of $400 million.
Rooney said the sale shows institutional and private capital are flowing back into the regional shopping centre market.
The Tea Tree Plaza deal is South Australia’s largest regional shopping centre transaction since November 2019, when Paragon REIT and MA Financial bought a 50% stake in Westfield Marion for $670 million from the Lendlease-managed Australian Prime Property Fund Retail.
“The opportunity to acquire a 50% stake in a dominant and strong performing regional shopping centre in Adelaide’s affluent north-eastern suburbs garnered both domestic and offshore investor interest. This interest was underpinned by the centre’s genuine value-add potential, robust investment fundamentals, South Australia’s stamp duty exception and attractive retail yield spread relative to Sydney and Melbourne.
“This window of opportunity is beginning to close, with more investors looking to come back into the retail sector as interest rate volatility stabilises given the compelling returns on offer,” he added.
Rooney’s comments echo Matt Healy, head of retail at Elanor Investors Group, who recently wrote in Australian Property Journal, that the retail commercial property market continues to show remarkable resilience, presenting an opportune moment for investors to seize new opportunities.
The acquisition comes just weeks after Vicinity Centre’s agreement with the Future Fund to acquire its 50% interest in Lakeside Joondalup, Western Australia.
In April Centuria Capital bought the Halls Head Central sub-regional centre from ISPT for $70 million, which was 40% below replacement cost. Charter Hall acquired Eastgate Bondi Junction in February for nearly $127 million. ISPT also sold the Brisbane home of fast fashion giants H&M and Uniqlo for $145 million.
Tea Tree Plaza has a total gross lettable area of 101,052 sqm and is anchored by Myer, Big W, Kmart, Target and Harris Scarfe alongside a triple supermarket offering in Coles, Woolworths and Aldi, nine mini-majors, 201 specialty stores, a dining precinct offering 10 restaurants and a Hoyts cinema complex.
It is located in Adelaide’s growing north-eastern suburbs, approximately 15km from the CBD and draws 10.8 million customers annually, catering to a significant trade area population of over 440,253 residents, which is forecast to reach 487,795 residents by 2041.
An additional $40 million in upgrade works are set to be completed in the first half of this year. Set on a massive 22.4 hectare site, the centre has significant future expansion potential (STCA).
