HMC Capital buys Brandon Park centre in $107.5m sale

HMC Capital’s Last Mile Logistics Fund has bought Melbourne’s Brandon Park Shopping Centre.

Listed funds house HMC Capital is forging deeper into the hot last-mile logistics sector with the purchase of Brandon Park Shopping Centre in Melbourne’s southeast for $107.5m.

The group’s unlisted HomeCo Last Mile Retail Logistics Fund quietly picked up the centre and will now look to overhaul the property as a retail hub able to fully accommodate demand from e-commerce and omni-channel retailers.

The group bought the centre from funds house Newmark Capital in a deal brokered by CBRE’s Simon Rooney, James Douglas and David Minty with JLL’s Stuart Taylor, Nick Willis and Jesse Radisich.

Brandon Park will likely undergo a significant refurbishment and remixing, to become a convenient community-focused daily needs retail hub.

HMC Capital’s play reflects the attractiveness of essential daily needs properties that can be repositioned to include delivery uses at a time when the cost of apartment developments above centres – another way of unlocking value – is prohibitive.

The HMC fund is a growing unlisted wholesale trust focused on essential daily needs properties. It targets core-plus assets that can be repositioned into non-discretionary daily needs uses, with added last-mile real estate infrastructure.

The group seeded the fund last year with the purchase of Menai Marketplace in NSW from a Lendlease-run trust for $150m. It also picked up the backing of superannuation heavyweight Funds SA, which awarded it a $350m mandate. That helped give the unlisted vehicle the firepower to hit its ambitions of growing to $1bn worth of assets in the area.

Brandon Park Shopping Centre in Melbourne’s southeast has changed hands for $107.5m.

HMC Capital managing director of real estate Sid Sharma declined to comment on the most recent move but had previously said that “customers of the future want hyper convenience and instant procurement of a good or service”.

“Well-located retail centres become an increasingly integral part of solving this last-mile challenge for major retailers,” Mr Sharma said.

Mr Sharma said such retail outlets provided three modes of customer fulfilment: in store, direct-to-boot and home delivery. HMC Capital believes in having assets near residential areas, unlike traditional, out-of-the-way industrial facilities, as this boosts the speed of delivery.

“We see this adaptive reuse strategy as inherently sustainable and breathing new life into retail assets to ensure they remain a key community hub and cog in the supply chain,” Mr Sharma said.

Newmark Capital had bought the complex from Vicinity Centres and Telstra Super in 2018 for $135m. It won development approval in 2022 to add further medical, retail, commercial and residential usages across the site, which is designated as a major activity centre under planning controls.

The Wheelers Hill site is about 19km southeast of the Melbourne CBD and is near Monash University, with convenient access to major arterial roads and broader Melbourne from its corner location on Springvale Road and Ferntree Gully Road.

The retail centre spans a gross lettable area of 23,038sq m, and is anchored by Coles and Aldi. The centre also has five mini-majors and 86 speciality tenancies and kiosks.

The property consists of 5.81ha of land with a low site coverage of 40 per cent.

CBRE’s Mr Rooney introduced the buyer, and said investors were attracted by the centre’s metropolitan Melbourne location, coupled with the opportunity to enhance the retail offering via a repositioning.

“The site also offers future potential for a large-scale, mixed-use development opportunity subject to the relevant planning approvals,” Mr Rooney said.

“Shopping centres are increasingly evolving into multidimensional precincts, with Brandon Park providing the ideal platform to deliver a future project of scale and flexibility.”

JLL’s Mr Taylor said the subregional sector was receiving strong demand, particularly centres in metropolitan locations, driven by the ability of investors to achieve appealing yield spread to the risk-free rate and opportunities to drive enhancements via under-utilised land.

“Low volumes of retail transactions year-to-date, particularly in Victoria, is a result of a supply-demand imbalance, with participation levels in Brandon Park demonstrating the depth of investor appetite,” Mr Taylor said.

“The Brandon Park campaign generated interest from a large cross-section of buyers, notably from several new entrant private capital sources, who are increasingly looking to the retail sector as one of the value plays of the current cycle.”