Stockland agrees to sell two shopping centres to Sydney-based Haben

A month after announcing it expected the book value of its retail property portfolio to fall by 10 per cent, listed real estate giant Stockland has cut its losses and is set to offload two shopping centre assets.

As first reported by Street Talk, Stockland has entered agreements to sell The Pines shopping centre in Victoria and Caloundra shopping centre in Queensland for a combined total of more than $250 million, to Sydney-based property manager Haben Property Fund.

Haben sent information memorandums –seen by this column – to potential investors towards the start of July, outlining that it had entered into two heads of agreements to purchase the centres. The Pines shopping centre is the bigger of the two assets and would be bought for $160 million, with a $5 million rent guarantee, which reflected a passing capitalisation rate of 7.8 per cent. That price reflected a 16 per cent discount from when the centre was last valued in June 2019, at $184.5 million. It would be jointly bought by Haben and the JY Group, in a joint venture partnership.

Meanwhile, the Caloundra centre was pegged to sell for $97 million with a$3 million rent guarantee, which implied an 8 per cent passing cap rate. At its peak valuation in June 2018, Caloundra was worth $125 million.

Haben also agreed to buy a 21-house residential block adjacent to the centre for $8 million, under a three-year put and call agreement.

The two centres are anchored by big-name retail tenants including Aldi, Coles, Woolworths and Kmart. JLL’s retail investment team was helping negotiate the transactions. A Stockland spokeswoman told Street Talk the company did not comment on speculation.

News of the discounted sales come about a month after Stockland announced it expected to reduce the book value of its commercial property portfolio by 6 per cent, led by an expected retail portfolio devaluation of 10 per cent.

The two centres will be added to Haben’s portfolio, which also includes office, industrial and mixed-use properties.

Haben has acquired and managed more than $500 million in retail property investments, including the Croydon Central complex east of Melbourne’s CBD and the Seven Hills Plaza in north-western Sydney.

Haben snags Casey Central mall in $225m deal

Haben Property Fund, partnered by Hong Kong investor JY Group, have acquired the Casey Central shopping mall in Melbourne’s south for $225 million, making it the state’s largest such sub-regional shopping center transaction in five years.

The deal was struck on a yield of around 5.4 percent, a relatively tight metric that will be closely noted in a market where sub-regional malls have been considered to be most vulnerable to the rise of e-commerce.

The market for major retail transactions is showing signs of re-emerging following the hit to revenue and values reported by major landlords in last year’s pandemic disruption.

On the sell-side is British investment house M&G Investments, which acquired the mall in late 2016 for around $221 million from Westfield operator Scentre.

“We are very pleased with the outcome achieved via a highly competitive sale process for Casey Central, with the fund delivering a strong outcome for its investors,” said James MacKinnon, head of M&G Investments’ real estate arm in Australia.

“The asset has shown incredible resilience through a challenging last 12 months and we have been very pleased with its performance over our period of ownership.”

The center is anchored by Coles, Woolworths, Aldi, and a brand-new Kmart discount department store. Together, major tenants occupy 54 percent of the total space. Underpinning that income, the average lease expiry across the center is 14.4 years by income.

“We are very focused on the long-term growth fundamentals of the asset and see an opportunity to build on the strong foundations that M&G put in place during their ownership,” said Haben’s managing director, Ben Finger.

Haben and the JY Group have teamed up on retail investment previously, striking a near $160 million deal midway through last year to acquire the near $160 million deal midway through last year to acquire the Pines shopping center in Melbourne from Stockland.

The Casey Central transaction was brokered by Colliers’ Lachlan MacGillivray, who said the sale brought the total volume of sub-regional transactions for the year to more than $1.2 billion.

“Casey Central is one of the best quality town centers that we have seen offered to the market in recent times,” he said.

“It ticked all the boxes that astute investors were looking for in that it offered a secure tenant profile, limited required capital expenditure, and is perfectly positioned to capture the future growth potential of the trade area.”

The flow of chunky retail assets has picked up in recent months. In April, Lendlease’s APPF Retail sold CS Square shopping center on Melbourne’s north-western edge to the De Lutis family for $136.5 million on a passing yield of about 6.5 per cent. In the same month, Elanor Investors Group bought a Toowoomba mall for $145 million deal on a 7.9 per cent yield from Blackstone, which had acquired it five years earlier for around $188 million.

Last month, Perth’s Mirrabooka mall, part of the real estate empire put together by billionaire Stan Perron, sold to syndicator Fawkner Property for $195 million on a passing yield of 6.97 per cent.

GPT divests Wollongong Central after 25 years

Haben intends to seed a fund with a Wollongong shopping centre and office it is picking up for $402 million.

The vendor, GPT Group, has held the asset, Wollongong Central, since 1996.

It tried to sell it four years ago – just after a $68m renovation.

Wollongong Central while it was being extended in 2014.
The Haben deal reflects a slight increase on the $390m December, 2020, book value, which assumed a six per cent capitalisation rate.

It was appraised at $459.9m at the end of 2019.

GPT was represented by Colliers’ Lachlan MacGillivray who declined to comment.

Also today we are reporting Elanor Investors Group paid Blackstone $136.25m for the Warrawong Plaza, about seven kilometres away.

Coincidentally, that asset will also seed a fund.

Wollongong Central

Wollongong Central comprises Crown Central, which was completed in 1975, and picked up by GPT 25 years ago.

In 1998, the property giant acquired the neighbouring Crown Gateway, then 12 years old, from the Wollongong City Council.

In 2000, the manager merged the complexes via a pedestrian bridge and renamed it (story continues below).

The asset has been held by the GPT Wholesale Shopping Centre Fund for 14 years.

Tenanted to about 212 groups, it contains c55,000 square metres of gross lettable area – inclusive of a 12 storey office.

There are also 2104 car parks.

The substantial site has significant development upside with GPT previously proposing to fill the airspace with office and apartment towers.

Haben stocks up

The Wollongong Central sale comes four months since Haben, in partnership with JY Group, paid M&G Investments $225m – a price reflecting a 5.38pc yield – for Casey Central, in Melbourne’s Narre Warren.

Last year, the partnership spent $153m on The Pines shopping centre, 20 kilometres east of the Victorian capital.

Also in 2020, the joint venture acquired the Caloundra Shopping Centre, on the Sunshine Coast, for $97m.

The vendor of both these assets was Stockland.

Roselands’ sale highlights surging buyer interest in retail investment opportunities

Fast-growing investor JY Group has outlaid $167 million for a 50% interest in Roselands Shopping Centre in Sydney’s southwest.

CBRE’s Head of Retail Capital Markets, Pacific, Simon Rooney negotiated the off-market sale on behalf of CIP Asset Management, amid a surge in buyer interest in shopping centre investment opportunities

Mr Rooney noted that almost $4.52 billion had flowed into Australian retail investments in Q2 and Q3, up 118% on the same period last year and markedly ahead of the comparative spikes in office and industrial transactions (which were up 88% and 87% respectively).

That momentum has continued into Q4, with yesterday’s announcement that UniSuper and Cbus Property have partnered with AMP Capital to take majority ownership of Pacific Fair on the Gold Coast and a half stake in Sydney’s Macquarie Centre in a $2.2 billion deal.

“Retail is the real mover at present, with at least another $2 billion in assets expected to change hands this year,” Mr Rooney said.

“The comparative returns and value proposition is clearly compelling, with major owners now able to competitively rebalance portfolios, allowing incoming investors to strategically acquire some of Australia’s best retail assets. This return of institutional capital into the sector, combined with strong private investor demand, will see heightened transactional activity into 2022.” 

JY Group already owns three Melbourne shopping centres, having teamed with Mulpha Australia to acquire Brimbank Shopping Centre for $153 million in 2019, before joining with property funds manager Haben to purchase Casey Central from M&G and Stockland The Pines for $225 million and $155 million respectively.

Mr Rooney noted that Roselands’ strong performance, track record and future value-add, mixed-use development potential had been key buyer drawcards.

“Roselands provided an extremely rare and highly sought-after opportunity to acquire a stake in a Sydney metropolitan-based regional shopping centre,” Mr Rooney said.

“JY Group strategically acquired the asset off-market prior to a formal campaign commencing, with the price reflecting a material premium to the most recent external book valuation and a continuing shift in investor sentiment towards premium retail investment opportunities.”

Roselands Shopping Centre was one of Sydney’s first regional shopping centres and was the largest in the southern hemisphere on its completion in 1965. It is situated just 16 kilometres south-west of the Sydney CBD.

“Located within an extensive and well-established trade area, it provides an immediate opportunity to create a truly mixed-use town centre precinct, given the sizeable site area of 14.3ha, prominent metropolitan location and ready access to public and private infrastructure.”

The existing centre has a gross lettable area of 63,344sqm, anchored by national retailers Myer, Woolworths, Coles, Aldi and a new Kmart discount department store, which recently replaced Target.
Mr Rooney noted that the centre had recently benefitted from a $90 million redevelopment and a significant upgrade to the ground floor fresh food precinct, known as ‘The Markets’, comprising new fresh food and speciality food retailers, a new Aldi, a refurbished Coles and a new Woolworths. 

Combined the three supermarkets generate more than $140 million in annual turnover, supported by robust performing speciality tenants demonstrating considerable month-on-month growth following the recent redevelopment. 

The centre services a well-established and densely populated trade area of 481,260, projected to increase to 530,970 persons by 2031, with a significant retail spending capacity of $6.5 billion, including $1.1 billion in the PTA, with a forecast growth of 3.3% p.a., to reach$9.0 billion by 2031.

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Investors pump billions into shopping malls as retail rebounds

Investors have roared back into the shopping center market, snapping up $4.52 billion worth of assets in anticipation that the pandemic-hit sector will rise again and provide high-yielding returns.

The asset sales have defied the impact of the global pandemic, which forced most non-food tenants to shut down for many months. With restrictions easing, investors are rushing to get a foothold in bricks-and-mortar retail.

CBRE’s head of retail capital markets, Pacific, Simon Rooney, who sold a half share of the Roselands mall in Sydney’s south-west to the acquisitive Hong Kong-based JY Group for $167 million, said retail was the real mover at present, with at least another $2 billion in assets expected to change hands this year.

“The comparative returns and value proposition is clearly compelling, with major owners now able to competitively rebalance portfolios, allowing incoming investors to strategically acquire some of Australia’s best retail assets,” Mr Rooney said.

He added the return of institutional capital into the sector, combined with strong private investor demand, would lead to heightened transactional activity into 2022. He said almost $4.52 billion had flowed into Australian retail investments in the past six months, up 118 per cent.

That cash has already rolled into what is the biggest direct retail property transaction in Australia to date and the largest deal globally in the last three years with UniSuper and Cbus Property acquiring an 80 per cent and 50 per cent stake in regional malls, Pacific Fair on the Gold Coast and Macquarie Centre in Sydney.

The assets came from an AMP managed fund at book value for $2.2 billion on a weighted average capitalisation rate of 4.66 per cent.

Under the deal, the assets will be held in the AMP Capital Retail Trust, which UniSuper and Cbus Property will have majority stakes in, with AMP Capital owning the balance. AMP Capital will maintain management rights of the assets and look at redevelopments including a mixed use scheme at Macquarie Centre.

Sholto Maconochie, from Jefferies, said he expects retail asset values to hold firm at the December 2021 levels for regional malls.

He said the AMP deal showed super-fund demand for high quality retail assets which had been lacking recently, with investors typically favouring smaller more convenience and large-format style assets since the onset of COVID-19.

“Since the onset of COVID-19, regional malls values declined by around 10 per cent to 15 per cent and while re-leasing spreads – the difference between rents paid in existing leases and new ones – were around negative 10 per cent at June 2021, they are starting to improve and stabilise.

In a separate deal, Dexus is seeking to sell minority 20 per cent and 25 per cent stakes in Pacific Fair and Macquarie Centre from its managed wholesale fund DWPF, which took over management rights of AMP’s diversified property fund (ADPF) early this year and merged it with DWPF.

Mr Maconochie said Scentre Group and Vicinity Centres were looking at these minority stakes to get management rights, but given the AMP transaction, it is unlikely they would be interested in a minority stake with no management rights.

In the Roselands deal, JY Group bought the stake from Challenger asset management, with Vicinity owning the other half and remaining the manager of the 63,344 square metre mall.

Roselands Shopping Centre was one of Sydney’s first regional shopping centres and was the largest in the southern hemisphere on completion in 1965.

It recently underwent a $90 million redevelopment and upgrade to the ground-floor fresh food precinct and is anchored by Myer, Woolworths, Coles, Aldi and a new Kmart discount department store, which recently replaced Target.

In other recent deals, Vicinity snapped up a 50 per cent interest in Harbour Town Premium Outlets on the Gold Coast for $358 million, and GPT sold Casuarina Square in Darwin for $420 million and Wollongong Central for $400 million.

Hong Kong player buys into Roselands as mall deals mount

Hong Kong investment house JY Group has pounced on a half stake in one of Australia’s oldest suburban shopping centres, Roselands in Sydney’s south-west, in a $167 million transaction above book value that adds further momentum to the resurgence in retail real estate.

Roselands opened in 1965 and was once billed as the largest shopping centre in the southern hemisphere. The 63,500sq m mall owned jointly by Challenger and ASX-listed Vicinity is well known to shoppers across Sydney’s south-west.

Challenger’s stake hit the market two months ago with expectations of $150 million, while Vicinity’s half share is on its books at $139 million.

The deal with JY Group was struck around a 6.3 per cent passing yield and about 6.5 per cent fully leased. Vicinity holds its interest on a 6.25 per cent rate.

The half stake has changed hands amid an upswing in shopping mall transactions as investors take heart that the reopening underway in Sydney and slated for Friday in Melbourne and slated for Friday in Melbourne will restore retail activity. There is also growing confidence that retail real estate values have stabilised after 18 months of disruption.

Evidence for that thematic was strikingly clear this week when AMP Capital teamed with UniSuper and Cbus Property in a $2.2 billion deal to buy into Pacific Fair on the Gold Coast and Sydney’s Macquarie Centre, in the biggest direct malls deal yet in Australia.

About $4.5 billion of investment flowed into retail deals in the second and third quarters, more than double the amount in the same period last year, according to Simon Rooney, CBRE’s head of retail capital markets for the Pacific region, who brokered Challenger’s divestment of its Roselands
stake.

“Retail is the real mover at present, with at least another $2 billion in assets expected to change hands this year,” Mr Rooney said.

“The comparative returns and value proposition is clearly compelling, with major owners now able to competitively rebalance portfolios, allowing incoming investors to strategically acquire some of Australia’s best retail assets.

“This return of institutional capital into the sector, combined with strong private investor demand, will see heightened transactional activity into 2022.”

The investment in Roselands is the latest addition to a growing portfolio of retail assets in Australia held by JY Group, which typically invests alongside ultra-high-net-worth families.

JY Group already owns three Melbourne shopping centres, including Casey Central, which it acquired in partnership with Haben Property Fund from British investor M&G for $225 million in July.

Deal flow, and scale, is quickly ramping up in the sector.

Vicinity last week bought a $358 million half-stake in the well-known Gold a $358 million half-stake in the well-known Gold Coast factory outlet-style mall, Harbour Town, in its first big acquisition since the pandemic shut down the retail market.

A week earlier, Brisbane fund manager Sentinel struck a deal with GPT to acquire Darwin’s Casuarina Square shopping centre for about $420 million.

CIP sells stake in Roselands Shopping Centre for $167 million

Fast growing investor JY Group has outlaid $167 million for a 50% interest in one of Sydney’s oldest shopping centres – Roselands Shopping Centre in Sydney’s south-west.

JY Group already owns three Melbourne shopping centres, having teamed with Mulpha Australia to acquire Brimbank Shopping Centre for $153 million in 2019, before joining with property funds manager Haben to purchase Casey Central from M&G and Stockland The Pines for $225 million and $155 million respectively.

CBRE’s Head of Retail Capital Markets, Pacific, Simon Rooney negotiated the off-market sale of Roselands on behalf of CIP Asset Management, amid a surge in buyer interest in shopping centre investment opportunities.

Rooney noted that almost $4.52 billion had flowed into Australian retail investments in Q2 and Q3, up 118% on the same period last year and markedly ahead of the comparative spikes in office and industrial transactions (which were up 88% and 87% respectively).

That momentum has continued into Q4, with yesterday’s announcement that UniSuper and Cbus Property have partnered with AMP Capital to take majority ownership of Pacific Fair on the Gold Coast and a half stake in Sydney’s Macquarie Centre in a $2.2 billion deal.

“Retail is the real mover at present, with at least another $2 billion in assets expected to change hands this year,” Rooney said.

“The comparative returns and value proposition is clearly compelling, with major owners now able to competitively rebalance portfolios, allowing incoming investors to strategically acquire some of Australia’s best retail assets. This return of institutional capital into the sector, combined with strong private investor demand, will see heightened transactional activity into 2022.”

Rooney noted that Roselands’ strong performance, track record and future value-add, mixed-use development potential had been key buyer drawcards.

“Roselands provided an extremely rare and highly sought-after opportunity to acquire a stake in a Sydney metropolitan-based regional shopping centre,” Rooney said.

In 2019, Vicinity Centres, co-owner of Roselands Shopping Centre delivered a $90 million fresh food precinct – The Markets.

‘The New Roselands’ is a community-focused, culinary destination that offers shoppers greater convenience and a premium food retail experience including a new ALDI, a transformed Coles, a new Woolworths and a wide selection of casual dining and quick bite options all on one convenient level.

Haben hops into GPT mall in $402m deal

Local investment house Haben Property Group has teamed up with Hong Kong-based JY Group to acquire Wollongong Central shopping center from GPT Group in a $402 million deal, the latest trade in a gathering rebound for the retail real estate market.

GPT’s divestment of the Wollongong mall in line with its book value, at about a 6 percent yield, follows 18 months of turmoil in the retail property sector, as the COVID-19 disruption for retail landlords combined with longer-term challenges, including the rise of e-commerce.

But with the reopening of Sydney and Melbourne and the resetting of retail values, deals have begun to flow again as investors become more confident on outlook and willing to seize opportunities.

Haben managing director Ben Finger said the acquisition aligned with the investment platform’s strategy to invest in retail assets that include the potential for mixed-use.

“Wollongong Central is an outstanding center in a fast-growing region which dominates its trade area,” he said.

Wollongong provides an attractive alternative for professionals and white-collar industries within an hour’s drive of the Sydney Airport.”

Joining Haben with a half stake is JY Group, a busy investor in the local retail market in its own right. The two investment houses paired up to acquire Casey Central in Melbourne from British investor M&G for $225 million in July.

The stake in Casey Central is one of three investments held by the Hong Kong player in Melbourne shopping centers. Last week it pounced on a half stake in one of Australia’s oldest suburban shopping centres, Roselands in Sydney’s south-west, in a $167 million deal.

The resurgence of confidence in retail real estate was underscored this month when AMP Capital teamed with UniSuper and Cbus Property in a $2.2 billion deal to buy into Pacific Fair on the Gold Coast and Sydney’s Macquarie Centre, in the biggest direct malls deal yet in Australia.

Colliers’ Lachlan MacGillivray, who brokered the Wollongong deal, said it was the first time in five years a 100 percent interest in a regional shopping center of such scale had transacted.

“While the sub-regional sector was particularly active, we are now seeing renewed investor confidence and purchaser engagement for larger retail assets. The sale of Wollongong Central is a show of strength for Australian retail investment in the current climate.”

For GPT, which is also preparing to sell Casuarina Square in Darwin to Sentinel for about $420 million – it was held in the GPT Wholesale Shopping Centre Fund – comes amid a broader
reweighting across its portfolio toward industrial assets.

“The divestment of the asset is consistent with GWSCF’s strategic focus on near-term asset enhancements and longer-term value creation, with mixed-use masterplans progressing for a number of assets within its
portfolio,” GPT said.

Shopping frenzy lifts big landlords, gives investors hope

A wave of recent transactions and a shopping frenzy as malls reopen augurs well for Australia’s large shopping centre landlords, whose shares are still trading on the stock exchange at pandemic-induced discounts.

Trade-in big retail assets is resuming and that shift is starting to provide evidence that mall owners’ assets may be undervalued, giving investors hope their shares will gain ground.

Between them, heavyweight mall owners Scentre Group and Vicinity Centres dominate Australia’s retail landscape, controlling or managing high-profile shopping emporiums like the country’s largest mall, Chadstone in Melbourne, and the nationwide network of Westfield-branded centres.

Early this week, Vicinity shares were at a net tangible asset discount to pre-pandemic levels of 20.7 per cent and Scentre’s at 16.4 per cent.

Two weeks ago, Vicinity Centres swooped on a $358 million half-share of the Gold Coast factory outlet-style mall, Harbour Town – it’s first large deal since the pandemic cruelled asset sales in the sector.

Marking the occasion, Vicinity boss Grant Kelley said Harbour Town’s moving annual turnover was more than double the average of the group’s current outlet-style portfolio and “expected to grow at more than 3 per cent per annum to 2031.”

“We take a slightly anti-consensus view to the popular belief that online sales will kill the malls.”-Jardine’s Lou Pirenc

In another deal, Perron Investments, a co-investor in another Vicinity owned centre – the Runaway Bay Shopping Centre in Queensland, sold its half-stake for $120 million at a 20 per cent markup on what Vicinity lists as its $107 million book value for its share.

And after 18 months of retail upheaval, another big acquisition supports the resurgence theory.

The sale of the Roselands shopping centre in southwest Sydney to Hong Kong-based JY Group for $167 million was struck at a suggested cap rate of 5.2 per cent.

Vicinity, which owns the other half of Roselands, has a book value on the asset that also implies the deal was done at a 20 per cent premium.

“In our view, this is more evidence that demand for larger retail is coming back and that negative revaluations during the COVID pandemic may have been overdone,” Jardine investment bank analysts Lou Pirenc and Andy MacFarlane said.

“Given most mall REITs are still trading at significant discounts to net tangible assets, we see this as a positive catalyst,” they said.

Another factor working in the malls’ favour is an expected surge in rental income as the deferrals and waivers that landlords were mandated to give to tenants during the pandemic fall away.

“If we assume that we go back to an environment where there are no waivers and everyone is paying rent, we would see a swing to Scentre Group of 24 per cent,” Mr Pirenc said.

Mr Pirenc said retail malls could also benefit by increasingly playing a bigger role in the last mile delivery of goods to consumers.

“We take a slightly anti-consensus view to the popular belief that online sales will kill the malls. As retailers increasingly struggle to get products to their consumers quickly, having locations close to where consumers live will benefit the malls.”

But he stressed it was “not a rising tide for all ships” as he expects stronger malls in better locations to gain share, with weaker malls in competitive markets to struggle.

Australia’s property market ignores China snub as Singapore, US funds rush for prized commercial assets

Investors are snapping up commercial properties in Australia with the rare support of Hong Kong buyers despite lingering Canberra-Beijing tensions, pushing the market Down Under towards its busiest in six years.

Commercial property investment involving deals above A$10 million has reached A$35.4 billion (US$26 billion) to date, a 70 per cent increase from a year earlier, according to Colliers International. The volume is within 17 per cent of the A$41.3billion recorded in 2015.
The surge in transactions follows Canberra’s move to ease pandemic curbs as governments around the world decided to “live with Covd-19” to revive economic growth. The decision appears to be aiding the real estate market, which has suffered from the withdrawal of mainland Chinese buyers as diplomatic relations deteriorated.

GPT Wholesale Shopping Centre Fund divests Wollongong Central

Haben Property Fund and Hong Kong-based JY Group have acquired a 100% interest in Wollongong Central for $402 million in the largest regional shopping centre sale nationally in more than five years.

Lachlan MacGillivray, Colliers’ Head of Retail Investment Services, facilitated the transaction on behalf of GPT Wholesale Shopping Centre Fund.

Wollongong Central is a 54,919m2 GLA shopping centre located 85km south-west of the Sydney CBD. The centre occupies a landmark 4.2ha site with long-term, mixed-use master planning opportunities (STCA).

“A 100% interest in a regional shopping centre of this scale has not been transacted in more than five years nationally,” MacGillivray said.

“Acquisition opportunities of this scale seldom come to market. While the sub-regional sector was particularly active, we are now seeing renewed investor confidence and purchaser engagement for larger retail assets. The sale of Wollongong Central is a show of strength for Australian retail investment in the current climate.”

Wollongong is one of Australia’s most exciting and dynamic regional cities and benefited from the recent trends of work flexibility and migration to regions. The high-quality amenities and the city’s vibrant lifestyle are driving population growth.

Wollongong Central caters to a large number of customer segments including local residents, workers, students and tourists, offering diverse retail expenditure catchments.

Wollongong Central presents to a world class standard, having undergone extensive redevelopment and refurbishment with the most recent works completed in 2017. The Centre comprises three main buildings connected by air bridges and subterranean linkages.

“We are very pleased with the acquisition of Wollongong Central, being part of our strategic plan to identify strong retail investments with opportunities for mixed use upside,” Ben Finger, Managing Director of Haben, said. “Wollongong Central is an outstanding centre in a fast growing region which dominates its trade area.”

“Wollongong provides an attractive alternative for professionals and white collar industries within an hour’s drive of the Sydney Airport. Wollongong Central is a landmark investment opportunity within the Wollongong City Centre, which is the major retail, commercial, entertainment and administrative hub of the Illawarra region.

“Major tenants David Jones, Coles and Target provide security of income and a key point of difference to competing centres within the trade area. Wollongong Central is the preeminent destination within the region for nationally recognised brands, with 91% of the GLA being occupied by national or chain tenants.”

The GPT Group’s Managing Director and Chief Executive Officer Bob Johnston said the divestment of the asset is consistent with GWSCF’s strategic focus on near-term asset enhancements and longer-term value creation, with mixed-use masterplans progressing for a number of assets within its portfolio.

The sale price is in line with Wollongong Central’s current book value. Settlement of the transaction is expected in December 2021.

Regions on the radar as Australia grows up

For the first time in 30 years, more people moved to the regions than the cities, and in a big way – 70,900 in the year to last June, according to the Australian Bureau of Statistics, compared to the eight metropolitan cities where population cumulatively decreased by 25,985.

From a residential planning perspective, this created bedlam in municipalities where demand is outstripping supply and house prices have surged, including Victoria’s Surf Coast and Bass Coast, Maitland in NSW, and Weipa, Mapoon, and the Sunshine Coast in Queensland.

But this generational “resettling” is also creating opportunities for commercial property investors – population growth will increase demand for retail, office, and industrial accommodation, some of which are in low supply in the face of massive incoming investment.

Population fuels jobs
With some regions recording record population growth, employment is also set to rise, which is good for commercial property.

According to the latest National Skills Commission employment projections, over 250,000 more jobs are forecast for regional Australia for the five years to 2025.

The impact of the higher employment levels of the regions can be seen in the office markets of Newcastle and the Gold Coast. According to the Property Council, as of January, occupied levels of office space in Newcastle reached new heights and the vacancy rate in the Gold Coast office market
fell to its lowest since 2008. In contrast, CBD office vacancies have increased to their highest rates since 1997.

Typically, the conversation about whether to invest in regional commercial property is short: it can have advantages, including high yields, but there are better opportunities and fewer risks in town.
Metropolitan areas also have a track record of population growth, essential for commercial (and residential) property sectors to thrive and, in some cycles, boom – something that happens less frequently in the regions.

Research into movement

But despite the focus on the cities, Australia is growing out – about 8.2 million people (or just under a third of the country’s 25.75 million residents) live outside the eight capitals.

If these ratios continue, about 13 million people could live regionally when
Australia’s population reaches 40 million by 2055.

Early research of movements since the pandemic shows that tree- and sea-changing Australians aren’t relocating far: a University of Melbourne study found on average it was within 125 kilometers from participants’ bases.

This is consistent with ABS research showing the country’s fastest-growing regions, like the Gold Coast, Wollongong, and Ballarat, are within “periurban” councils, classified as being just beyond the metropolitan fringe, with significant economic and social relationships to the largest nearby
the capital city, from which it attracts the most residents.

About 60 towns have a population of more than 20,000, considered big enough to provide the amenity and infrastructure of a city, and where rent and capital values have risen consistently throughout the cycles. Many of these precincts also have long-term land-use strategies to cater to population growth and commercial real estate development.

Broadly, population growth across Australia’s regions will also generate increased demand for retail and hospitality. Locations offering high amenities and accessibility are likely to experience greater tenant demand, which will fuel rental growth. Rising demand for commercial property has also resulted in increased investor activity, with sales volumes reaching record highs last year.

Usually the domain of private investors, the regions are increasingly attracting institutional appetite. Haben Property Fund and Hong Kong-based JY Group acquired a 100 percent interest in Wollongong Central last December for $402 million in the largest regional shopping center sale nationally in more than five years. Elsewhere, Charter Hall bought SPC’s facility in Shepparton, Victoria, for $66 million on an initial passing yield of 6.1 percent.

Incentives needed
There is no doubt Australia has the potential to contain more than 20 towns of more than 100,000 people (the size of Albury-Wodonga or Bendigo), and that, in the longer term, this would be advantageous if we were to consider a population of 100 million or more.

But for this to succeed – and to have more comfortable investing in the regions – all levels of government would need to step in with a range of incentives and strategies, perhaps starting with area migration agreements or regional provisional visas.

With offshore immigration set to return to pre-COVID levels by 2024, now might be the chance to put the “big Australia” concept, with the help of regions, back on the agenda.

While dwelling price growth in metropolitan areas has slowed recently, the growing challenge of housing affordability, coupled with more staff seeking to incorporate an element of remote working, show that the tree or sea change is no blip but a long-term trend.

HK Investor Buys Melbourne Mall From M&G and More Asia Real Estate Headlines

In today’s roundup of regional news headlines, a Hong Kong outfit buys an Australian shopping mall from M&G, a Sichuan-based developer becomes China’s latest debt debacle, and Singapore state holding firm Temasek reports a nearly 25 percent return in the century’s hardest year yet.

Hong Kong Investor Buys Melbourne Mall From M&G for $168M

Haben Property Fund, partnered by Hong Kong investor JY Group, has acquired the Casey Central shopping mall in Melbourne’s south for $225 million ($168 million), making it the state’s largest such sub-regional shopping center transaction in five years.

The deal was struck on a yield of around 5.4 percent, a relatively tight metric that will be closely noted in a market where sub-regional malls have been considered to be most vulnerable to the rise of e-commerce.

on in the first six months this year, a 54 percent jump from the same period a year earlier, when the COVID-19 pandemic froze appetite for deals, according to JLL. China led activity in Asia-Pacific, along with Japan and South Korea, the agency said.

JY Group acquires 50 per cent stake in Carlingford Court

Hong Kong-based JY Group has purchased a 50 per cent interest in the Carlingford Court shopping centre in Sydney from Telstra for $120.5m.

CBRE’s Simon Rooney negotiated the off-market transaction on behalf of Telstra Super, which puts JY Group in partnership with Carlingford Court co-owner and manager Vicinity Group.

According to Mr Rooney, the opportunity includes the potential for a mixed-use apartment development and would capitalise on the site’s proximity to Carlingford railway station.

“The result demonstrates the continued demand for quality, metropolitan subregional assets with a focus on non-discretionary spending,” Mr Rooney said.

“There is particularly strong interest in assets which offer mixed-use development potential and strategic value-add opportunities.”

In 2021, JY Group acquired Wollongong Central Shopping Centre and Roselands Shopping Centre; both of which were in affluent and well-established trade areas.
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In addition to being in a prime northwest Sydney location 18kms from Sydney’s CBD, Carlingford Court appealed to JY Group with its four level 33,298 sqm centre which featured retailers such as Coles, Woolworths, Target, Bing Lee, Fitness First and The Reject Shop.

It draws in 5.3 million visitors each year and has an annual turnover of $188m, including its supermarket offering.

It also has multi level car parks with 1,472 spaces.

From 2022 and onwards the Parramatta to Carlingford Light Rail will serve Carlingford Court on the former railway station.

The combination of economic uncertainty and rising interest rates has resulted in buyers becoming increasingly wary about placing money on retail assets.

Forest Hill Chase shopping centre sold for almost $260 million

Haben Property Fund and The JY Group have acquired a 100% stake in Forest Hill Chase Shopping Centre as investors continue to seek retail assets in metropolitan locations with long-term underlying land value and future development potential.

JLL’s Nick Willis and Sam Hatcher sold Forest Hill Chase shopping centre via an off-market process.

The three-level major regional shopping centre in Melbourne’s eastern suburbs is anchored by Coles, Woolworths, Big W, Target, ALDI, HOYTS and AMF Bowling, and supported by 131 specialty stores. The centre has substantial surrounding land parcels offering the ability to extract value from alternate uses in the future (STCA).

“Capital has identified the resilient nature of retail assets given the higher starting point for yields relative to other sectors and the de-risking of valuations that have taken place since 2020. Despite the discretionary spending slowdown expected from the second half of 2023, there is an identified value proposition in retail, in an environment where investors are seeking yield, and there is a clear opportunity to add value through the development of additional uses on the sites,” said Willis.

The asset is situated on 10.4 hectares of land at 270 Canterbury Road on the southwest corner of Mahoneys Road. Forest Hill Chase offers approximately 65,000m2 of Net-Lettable Area.

Originally opened in 1964 as an outdoor shopping centre, the now fully enclosed mall is located 18km from the Melbourne CBD and benefits from 11.3 million vehicle movements annually. With strong population and expenditure growth forecast within the trade area, Haben is excited to meet the changing needs of its customers with a dedicated focus on the retail shopping offer, improving amenity, enhancing entertainment, and elevating convenience to unlock the value of Forest Hill Chase.

“Our acquisition of Forest Hill Chase is in line with our strategy to acquire well-located, convenience-based retail assets that provide future mixed-use development potential.

“This asset complements our existing East Melbourne Portfolio, which includes Casey Central, The Pines and Croydon shopping centres,” he said.

“Syndicators have been one of the most active sources of capital for retail in the last two years, with over $2.5 billion worth of acquisitions in 2021.

“In comparison to a decade ago, where syndicators were largely inactive in the sub-regional sub-sector, over the past two years syndicators have been the most active source of capital into the sub-sector accounting for 35% of total sub-regional asset volumes,” said Hatcher.

JLL’s head of Capital Markets Research Andrew Quillfeldt commented on the performance of the retail sector; “Underlying asset performance in retail has been very positive over the last two years. Strong retail sales growth, which is now 27% above pre-pandemic levels, combined with a resetting of rents (lower) has improved occupancy cost ratios across the retail sector. Income sustainability was the major concern towards retail pre-pandemic, but that concern has abated considerably given the movement in both those key metrics. Market fundamentals will be well supported over the medium to long term by very limited new supply and population growth of 13-15% over the next decade.”

JY Group boosts Australian shopping centre portfolio to over $2bn with major acquisition – CBRE & Vicinity Centres

The Hong Kong based JY Group has expanded its Australian shopping centre portfolio with the $123 million acquisition of Melbourne’s Roxburgh Village. CBRE’s Simon Rooney negotiated the off-market sale together with James Douglas on behalf of Vicinity Centres (VCX).

The Hong Kong based JY Group has expanded its Australian shopping centre portfolio with the $123 million acquisition of Melbourne’s Roxburgh Village.

The purchase lifts the value of JY Group’s Australian shopping centre assets to over $2 billion following last year’s acquisition of a 50% stake in Sydney’s Carlingford Court and the recent acquisition of Melbourne’s Forest Hill Chase Shopping Centre together with Haben.

CBRE’s Simon Rooney negotiated the off-market sale together with James Douglas on behalf of Vicinity Centres (VCX).

The transaction was struck at a 8.8% premium to VCX’s June 2023 book value, reflecting a passing yield of approximately 7.25% and a fully leased yield of 7.74%. The asset is expected to be fully leased before settlement in March next year and continues to be managed by VCX.

Simon Rooney, CBRE’s Head of Retail Capital Markets – Pacific, noted, “The result demonstrates continued demand and ready liquidity for well-located, quality metropolitan sub-regional assets with a focus on shopper convenience, non-discretionary food, service and necessity-based spending such as that offered at the busy Roxburgh Village.

Mr Rooney said the VCX offering had attracted keen interest from primarily private based capital, given the potential for future mixed-use development, subject to the relevant planning approvals, to capitalise on the centre’s highly sought after metropolitan Melbourne location and immediate proximity to Roxburgh train station.

The north Melbourne site’s development potential, solid underlying cash flow, coupled with the centre’s landmark location in a population growth catchment, were key drawcards for JY Group.

Situated 23km north of the Melbourne CBD, Roxburgh Village is a 25,972sqm single level sub-regional centre, with anchors Coles, ALDI supermarkets and Sacca’s Fine Foods representing 48% of the GLA.

The centre is situated on a strategic, land rich 114,200sqm metropolitan site and provides car parking for 1,096 vehicles.

The centre benefits from a significant total trade area population of 53,561 persons located within a growth catchment as well as an impressive total centre annual turnover of $143.6 million, with supermarket turnover of $86.8 million (+11.7% YoY).