Major investor eyes off Adelaide’s Rundle Place
Cromwell Property Group’s dramatic overhaul of its portfolio is continuing with the group eyeing off the purchase of the $250 million Rundle Place retail property in the heart of Adelaide.
The counter-cyclical play by Cromwell, potentially with the assistance of one of its unlisted funds, could see it take a position on the mall in Adelaide that US private equity firm Blackstone is seeking to offload.
The move comes as Cromwell goes deeper into due diligence on its prospective purchase of 400 George St in Brisbane from Blackstone and German funds management house HSBC Trinkhaus for about $530 million.
Commercial Insights: Subscribe to receive the latest news and updates
Cromwell is assessing a move into the retail sector at a time when some players have pulled back as uncertainty surrounds the income of many centres as department stores struggle to gain traction.
However, the asset is part of a larger CBD complex and is trading well, particularly as new towers are built in Adelaide, boosting its trading area, and city retail remains a bright spot for players including Scentre Group and Vicinity.
Funds manager AMP Capital in May had looked at buying the Adelaide retail asset, but that deal did not proceed.
Sam McVay of McVay Real Estate and Guy Bennett of Knight Frank are handling the deal, but none of the parties were available for comment.
The Paul Weightman-led Cromwell has been actively trading and is cashed up from both property disposals and its equity raising last month. This week the company sealed a deal to sell its half stake in a $600 million North Sydney tower to Hong Kong billionaire Francis Choi.
Cromwell sold a half-stake in the Northpoint skyscraper to Dr Choi, giving him full control of the landmark in which he had picked up an initial half stake from Cromwell’s one-time backer, South African group Redefine Properties, last August.
Meanwhile, Cromwell is readying for a conflict with its new backer, Singapore’s ARA Asset Management, after cutting it out of last month’s $375 million placement.
The pair have been at loggerheads over corporate governance and potential for conflicts of interest between their highly active operations, with ARA reported to be considering lifting its stake in Cromwell back above 20%.
The Australian group is positioned for a $2 billion wave of property investments and is already also proposing a major redevelopment of its complex on Melbourne’s Collins Street.
Cromwell is also undertaking a hotel and office project in Sydney’s Chatswood and in the ACT it is converting the Tuggeranong Office Park to a 390-apartment seniors living village, in its LDK Healthcare venture.
On the funds side last week it bought the Altitude Corporate Centre in the Sydney suburb of Mascot from the Goodman Group for its main local direct property fund for $113.28 million.
Adelaide’s Rundle Place was completed in 2013 and is a five-level shopping centre on a prime location on Rundle Mall. It includes a 506-space carpark.
The centre comprises more than 23,000sqm of retail space, is anchored by a full-line Coles supermarket and a Harris Scarfe store, and has an Apple store and national specialty and mini-major chains.
Blackstone sold the attached 80 Grenfell St office tower, which houses the Bendigo and Adelaide Bank, last year to Centuria Capital and billionaire Paul Lederer for $185 million.
This article originally appeared on www.theaustralian.com.au/property.
