This article is from the Australian Property Journal archive
THE Dexus-managed AMP Capital Shopping Centre Fund has sold its half interest in a Townsville shopping centre for $115 million – 50% below what it paid nine year ago – reflecting the stalemate conditions between sellers and buyers that has dominated much of this year.
The stake was purchased by Sydney-based fund manager Haben Property Group, in the first major regional shopping centre of 2023 after it was offered to the market in February.
The sale price is a discount to the June 2023 book value of $130 million and a 7% cap rate that Stockland had pencilled in its books for its half share and is below the $150 million June 2022 valuation.
In further reflection of how far retail values have fallen over the last few years, the sale price is below what AMP Capital had paid Stockland in 2014, of $228.7 million.
JLL’s Nick Willis and Sam Hatcher sold the property via an on-market expressions of interest (EOI), and said campaign received strong levels of investor interest due to the relatively low price point to acquire an interest in a dominant regional shopping centre.
“This transaction provided an opportunity for capital to acquire a Regional centre at a relatively affordable entry price point and benefit from the fortress fundamentals that regional shopping centres offer,” said Willis.
Located in the heart of Townsville, the 45,021 sqm centre underwent a $180 million redevelopment and expansion in 2012, anchored by a full-line Myer, the only department store within a 345km radius, and Woolworths and Big W.
There are seven mini-majors Rebel, Priceline, Country Road, Cotton On Mega, The Reject Shop, Best & Less, dining precinct and more than 130 specialty stores, with approximately 2 hectares of adjacent development land.
Willis said the transaction reaffirms liquidity for the regional sub-sector, in addition, the continuing trend of new capital emerging for interest in institutional-grade retail assets.
“In the last three years we have seen 16 partial interests trades, totalling more than $3.75 billion of capital, of which 60% was maiden. This has included a mix of super funds, syndicators and private investors, such as Nikos Property, which acquired 50% of Colonnades Shopping Centre in South Australia; this was their first foray into shopping centres.
“On the superfund front, both Cbus and Aware Real Estate have made initial plays into the sector, with Cbus acquiring interest in both Macquarie Centre (Sydney) and Pacific Fair (Gold Coast) alongside UniSuper, and Aware Real Estate acquiring a 50% interest in Sunshine Marketplace in Melbourne,” he added.
“Given the lack of available opportunities during the last 12 months, this is forcing groups to change strategies or normal course of management in order to get access to quality opportunities. This includes Haben acquiring a 50% interest in Stockland Townsville, marking the group’s first non-management 50% interest acquisition.
“Globally we are seeing capital re-emerge for retail assets, due to the growing evidence of assets’ forecast performance, relative value and underlying land and multifaceted nature, compared to other sectors,” Willis continued.
Hatcher said Stockland Townsville has continued to benefit from the strong economic performance of the wider Townsville region. Rent collection in the centre has been at 100% for a consecutive 25 months, which has led to positive leasing spreads now being achieved on several recent leasing transactions.”
Managing director of Haben, Ben Finger, said: “Haben is pleased to add Stockland Townsville to our growing portfolio. The opportunity is on strategy with our business to provide stable and higher returns for our investors in this higher interest rate environment. Our portfolio is very focused on robust retail assets with strong underlying land that provide mixed use development opportunities. We continue to see our centres trade with exceptionally strong sales growth, low vacancy, and positive rental spreads.”
The fact that Stockland Townsville is the first major regional sale this year, reflects the lack of transactions for much of 2023. According to JLL, retail transactions for 1H23 are 50% down on 1H22 and with only 30 transactions being recorded in 1H23, this makes it the lowest half year on record by deal count.
Latest data shows more than 400,000 sqm of retail space was placed on the market but transactions in the three months to August are down 62.5%.
