This article is from the Australian Property Journal archive
STOCKLAND continues to divest non-core retail assets, selling the Jesmond shopping centre for $118 million as it reweights its portfolio towards the buoyant logistics and industrial sector.
Located in Newcastle’s western suburbs, the sub-regional centre sold at a discount to its current book value of $130 million, and price tag is a far way from the $165 million book value it carried when Stockland started shopping the asset around two years ago.
Big W, Woolworths and Aldi anchor the 20,328 sqm mall, supported by one mini-major, 64 specialties and two pad sites on a 4.6-hectare site. Occupancy is at 97%, and the centre sold at a 7.5% core cap rate with a weighted average lease expiry of 7.7 years after Stockland spent around $10 million on improvements, introducing a new dining precinct in 2015 and the Aldi supermarket.
Stockland is about halfway through its $1 billion retail asset selldown as it seeks to increase its exposure to the much stronger industrial and logistics sector. Harsh trading conditions have punched a $474 million hole in its retail portfolio value, and Stockland announced yesterday it had picked up two logistics assets from Fife Capital in Brisbane with a total end value of $140 million.
“Our logistics portfolio has almost doubled in size since December 2013, and continues to perform strongly as we up-weight our exposure to this asset class through development and strategic acquisitions,” Stockland’s managing director and chief executive officer, Mark Steinert said yesterday, adding that the group would finalise the remaining settlements from $505 million of exchanged non-core retail divestments in the coming months.
Stonebridge agents Carl Molony and Jonathan Fox, in conjunction with Colliers negotiated the off-market transaction of Jesmond shopping centre. Haben Property Fund acquired the mall, marking another purchase from Stockland following Stockland Wallsend, also in Newcastle, for $81 million in 2018, and Cleveland shopping centre in Brisbane earlier this year for $103 million.
Stockland offloaded the Cleveland centre at the same time as the Toowong centre in Brisbane’s south for about $40 million, for a combined 2.9% discount to book value. In July, it sold Tooronga Village in Melbourne’s eastern suburbs for $63 million.
The group has decided to accept the softened values across the sector in its divestment plan, while others have chosen to baulk. Tough retail conditions and a saturation of properties on the market forced Vicinity Centres to abandon plans to divest 12 non-core assets, as well as establishment of a wholesale fund with Keppel Capital. Vicinity’s annual net profit slumped from $1.22 billion to $346.1 million, and it saw a $237.1 million drop in property portfolio value.
It had sold off 12 assets for $670 million at a 3.9% discount to total book value in the past 12 months.
