Brisbane centre stake goes for record $800 million
Aside from being the largest single-asset retail transaction, Indooroopilly is also the first super-regional shopping centre to be sold via an on-market campaign since 2010 and is the first super-regional centre sale with management rights in over a decade. Simon Rooney of JLL and Lachlan MacGillivray of Colliers International handled the transaction on behalf of Eureka – Real Assets, acting in its role as investment manager for Commonwealth Superannuation Corporation (CSC).
The AMP Capital Shopping Centre Fund (ASCF) and the AMP Capital Diversified Property Fund (ADPF) have each acquired a 25 percent stake in the centre with management rights in a deal worth over $800 million.
“We received significant domestic and offshore interest in Indooroopilly,” said Rooney.
“Dominant super-regional shopping centres are rarely traded, tightly held and the opportunity to gain management rights was a major attraction to the leading industry operators looking to expand their platform.
Rooney said investors globally are focusing on major shopping centres which dominate their trade area and offer customers an all-encompassing retail offering. Consequently, investors are positioning their portfolios towards highly resilient assets which can outperform by delivering solid risk-adjusted returns.
“With Indooroopilly, investors were attracted to the potential to materially add value to the existing centre and capture long-term mixed-use development opportunities on the site – a trend we are seeing across the broader retail sector,” said Rooney.
The sale of a 50 percent share in Indooroopilly is further evidence of a strong and growing trend to joint venture transactions according to Rooney, who pointed towards a number of major assets offered for sale in 2017 on a joint-venture basis.
Earlier this month, GIC and Vicinity Centres entered into a $1.1 billion swap transaction for 50 per cent interest in three Sydney CBD assets with management rights for a 49 per cent share in Chatswood Chase.
“By divesting a part-share in large individual assets, vendors are able to retain an interest in these quality assets but can also unlock capital for redeployment into other opportunities and can diversify their portfolio across multiple assets and states,” said Lachlan MacGillivray Colliers International’s head of retail investment services Australia.
“Indooroopilly was the first highly competitive on-market test for pricing benchmarks in the last few years. There was a lack of transaction evidence in the regional shopping centre sector over 2015 and 2016, but three regional shopping centres have traded in 2017.”
In addition to the sale of Indooroopilly, Highpoint Shopping Centre reflected a yield of 4.25 per cent and Chatswood Chase reflected 4.75 per cent – although both were direct off-market transactions.
Indooroopilly services the inner western and southwestern suburbs of Brisbane and represents one of four super-regional centres in Brisbane. The centre is located in an extensive trade area comprising close to 650,000 people and attracts an estimated 12 million customer visits a year.
“The shopping centre is a consistently strong performer and enjoys an affluent trade area, underpinned by attractive demographic characteristics,” said MacGillivray.
“The average per capita income in the main trade area is 30 per cent above the Brisbane metropolitan average and the population growth in the past five years has been 2.3 per cent per annum, significantly higher than the Australian average of 1.7 per cent.”
Originally built in 1970, Indooroopilly was expanded in 1987, 1998 and most recently in 2014 to approximately 116,447 sqm of total lettable area.
The shopping centre is anchored by Myer and David Jones; Kmart and Target; Coles and Woolworths; a 16 screen cinema; 14 mini majors; over 300 specialty shops; and parking for close to 4,600 cars.
The recent $450 million redevelopment, completed in 2014, included the addition of the first Uniqlo and the first H&M stores in Queensland.
The total site area is approximately 7.8 hectares and includes surrounding, highly strategic land holdings, offering further development potential. The area is identified as a Principal Regional Activity Centre, permitting mixed use redevelopment on the ancillary land.
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