ISPT finds a suitor on Cranbourne Park stake
Melbourne’s Cranbourne Park Shopping Centre.
The heat in the shopping centre market has been highlighted by talks between private equity real estate investor IP Generation and ISPT regarding a 50 per cent interest in Melbourne’s Cranbourne Park Shopping Centre for about $125m.
The demand for shopping centres is spiking at year’s end as the funds houses that have dominated buying in this part of the cycle want to stock up ahead of larger players returning to the market.
IP Generation has been active, and in June snapped up Stockland’s Glendale centre in Lake Macquarie, NSW, for about $315m.
Retail property is in demand despite the cost-of-living crisis as buyers believe that interest cuts are on the way, which will cut their borrowing costs and lift consumer confidence.
ISPT put the stake in the centre on the block last month, just as investors were surging back into the market. They chased the interest in the dominant subregional shopping centre, which sits on a 7.51ha land parcel in Melbourne’s burgeoning southeast corridor.
The centre is managed and co-owned by retail giant Vicinity Centres, which will remain running the property. The shopping centre giant once valued the entire complex at about $320m at its peak, on a capitalisation rate of about 5.25 per cent, but it will now change hands above 8 per cent in keeping with the shift in the market.
JLL’s Nick Willis, Sam Hatcher and Stuart Taylor and Stonebridge’s Justin Dowers, Carl Molony and Philip Gartland are handling the sale but declined to comment.
Cranbourne Park is the largest centre in the trade area, with specialty productivity exceeding $10,000 per sq m, placing it in the top 20 of Little Guns reported by SCN last year.
Coles in Cranbourne Park Shopping Centre.
It is anchored by Coles, Target, Kmart and Harris Scarfe, alongside 25 food catering tenants, 29 apparel tenants and 23 retail service providers, with occupancy at 97 per cent.
Fresh investors have poured into the sector over the past 12 months and demand for retail property is on the rise.
In 2015, ISPT and Vicinity undertook a $113m revitalisation and expansion, introducing Target into the trade area, an additional 12,500sq m of retail space and a new food precinct.
The centre is also a rare subregional asset to hit the market in metropolitan Melbourne, and was just the second on the block this year.
The property is underpinned by strong population growth and more than 55,500 dwellings forecast to be developed in its trade area, so it can build on the turnover of about $320m.
Local private investors and syndicators have been the largest buyers of retail over the past three years, totalling more than $13bn. But now more offshore investors and funds are looking to re-engage in the sector.
ISPT has been selling assets. This month, Asian-backed property player JY Group bought a half stake in Warriewood Square on Sydney’s Northern Beaches for $135.5m from the ISPT Core Fund.
It has also capitalised on interest in industrial real estate by carving up a three-strong portfolio worth about $250m. ISPT split a sale portfolio between two buyers; the Rowe family behind the Busway empire, which is buying in Sydney, and another fund manager, Irongate, which is buying in Queensland.
