$800m Indooroopilly deal marks year’s largest retail sale
AMP Capital’s wholesale Shopping Centre Fund and Diversified Property Fund have teamed up to strike the year’s largest retail property purchase, with the pair buying a half stake in the Indooroopilly Shopping Centre in Brisbane for $800 million, in a deal that will help reset retail property values across Australia.
The two AMP-managed funds each acquired a 25% stake in the landmark shopping centre from investment manager Eureka-Real Assets, which was acting for the Commonwealth Superannuation Corporation.
While CSC will retain a half stake in the $1.6 billion centre, AMP Capital will also assume the management of the super-regional centre in a transaction that showed a crisp yield of about 4.25%.
Commercial Insights: Subscribe to receive the latest news and updates
JLL’s head of retail investments, Australasia, Simon Rooney, and Colliers International’s head of retail investment services, Australia, Lachlan MacGillivray, handled the deal.
Winning control of the centre is a major coup for AMP, which will now have a platform from which to expand in Brisbane and take on the dominant player, Scentre Group, which owns the Westfield malls in Australia and New Zealand.
Scentre, GPT Group and Lendlease all chased the centre, which sits 7km from the CBD in the city’s affluent inner west. Open since 1970, it underwent a major redevelopment in 2014 and comprises a gross lettable area of 116,447sqm.
Brisbane’s Indooroopilly Shopping Centre.
AMP Capital has emerged at the cutting edge of the shift into joint-venture deals in the retail property industry.
It also picked up a half stake in Rockingham Shopping Centre, south of Perth, from a Vicinity-run fund for more than $300 million.
AMP Capital global head of real estate Carmel Hourigan says the Indooroopilly centre is in the sweet spot of what AMP Capital does well for its investors and is in keeping with its bullish views on premium retail centres.
“We’re confident about the prospects of retail when it comes to assets such as Indooroopilly,” Hourigan says.
“Shopping centres that are strategic about capturing greater market share by offering experiential retail, embracing mixed-use, becoming a place to go rather than just a place to shop, and working with the online channel to provide the best experience for customers will succeed.”
AMP Capital views the Indooroopilly centre as a “compelling investment opportunity” due to its long-term asset management and development potential, underpinned by leases to seven major tenants including Myer, David Jones, Coles and Woolworths and 14 mini-majors, such as H&M and Uniqlo. It also offers long-term mixed-use development opportunities, including the potential to add 90,000sqm in gross floor area, as well as apartments.
We’re confident about the prospects of retail when it comes to assets such as Indooroopilly
AMP Capital Shopping Centre fund manager Conrad Sinclair says the acquisition is in line with the fund’s strategy of owning super-regional retail assets that dominate their trade area and with potential for expansion.
“The fund’s investors now have an 81% exposure to regional and super-regional shopping centres,” he says, adding the deal follows a $200 million equity raising.
AMP Capital Diversified Property fund manager Kylie O’Connor says the Indooroopilly centre is also a good fit for its portfolio, which in retail has a “higher weighting towards regional and super-regional retail assets”.
Rooney says significant domestic and offshore interest was received for Indooroopilly, as such dominant super-regional centres rarely trade. “The opportunity to gain management rights was a major attraction to the leading industry operators looking to expand their platform,” he says.
Rooney says that investors globally are focused on major shopping centres.
This article originally appeared on www.theaustralian.com.au/property.
