This article is from the Australian Property Journal archive
THE Dexus Whole Property Fund (DWPF) has completed its sell-down of a trio of sub-regional shopping centres, with Deepwater Plaza on the Central Coast selling for $112 million, whilst Hines has sold 260 Queen Street in Brisbane for $140 million, both deals injecting some late-year momentum into the commercial real estate sector.
The sale of the Woy Woy asset follows the $15 billion unlisted fund’s divestment other sub-regionals in Beenleigh Marketplace, south east of Brisbane, for $85 million as well as Shepparton Marketplace in regional Victoria for just over $88 million, on a cap rate of 6.25%.
“The divestments of these assets continues the implementation of the fund’s strategy to hold larger regional retail assets,” DWPF fund manager, Michael Sheffield said.
Deepwater Plaza is the only sub-regional centre of its size on the Central Coast. It has more than 15,000 sqm of retail space, the centre is home to Coles, Kmart, Best & Less, Service NSW and more than 45 specialty stores.
The sale was handled by CBRE’s Simon Rooney.
The trio of deals is part of a flurry of late-year activity in the retail sector that has seen HMC Capital pick up $242.5 million worth of shopping centres in Perth and Sydney from Lendlease, including Southlands Boulevarde in south Perth and Menai Marketplace in Sydney, just after Sentinel Property Group confirmed its $280 million acquisition of Caneland Central Shopping Centre in Mackay – also from Lendlease – on a passing yield of 7.7%.
That followed major retail transactions slowing to a trickle during 2022. Just under $300 million worth of retail property was sold in the three months to November, a 79% fall from the $1.4 billion-plus that changed hands in the same period last year, while capitalisation rates have climbed to nearly 6%. The dry spell followed a string of bumper retail asset transactions, including Sentinel’s $418 million acquisition of Darwin’s Casuarina Square from GPT Group.
Meanwhile billionaire coal miner Sam Chong has snapped up 260 Queen Street in Brisbane’s CBD for $140 million.
The sale produced a $50 million capital gain for US giant Hines, which acquired the 23-storey 13,000 sqm office in July 2018 for $90 million.
This transaction comes hot on the heels of Real Asset Management (RAM) purchasing 333 Ann Street in Brisbane for $141.1 million last month, whilst Lendlease and Realside Financial jointly purchased Brookfield’s 108 St Georges Terrace A Grade commercial tower in the Perth CBD for $339.75 million.
Although these last minute deals will boost transaction volumes in Q4, it is expected that the final quarter of this year remains on track to be one of the quietest period with just over $2.5 billion worth of sales reported, in contrast to a bumper Q3 2021 with over $30 billion.
In a recent Australian Property Journal Talking Property podcast, Benjamin Martin-Henry, head of real estate research, Pacific with Real Capital Analytics (MSCI), noted that retail investment volumes fell 41% in the September quarter, and for the first three quarters of the year were down 18% year-on-year.
Interest rate hikes and higher prices have slowed growth and dampened the outlook for consumer activity amid a “last hurrah” for household spending, according to Commonwealth Bank, and businesses are expecting conditions to weaken materially in 2023, data from NAB shows.