Paragon offers up Figtree Grove in $200m shopping centre play
Wollongong’s Figtree Grove Shopping Centre has 71 specialty stores as well as Kmart, Coles and Woolworths
The shopping centre market is set for another test with the offer of Figtree Grove in the NSW coastal hub of Wollongong, which is expected to draw bids of close to $200m.
The centre, majority-held by Singapore’s Paragon REIT, with a minority stake held by listed fund manager MA Financial, is being quietly offered via real estate agency JLL as the international group rationalises its property holdings.
They picked it up from private equity giant Blackstone in late 2018 when they operated under different monikers. The Singaporean group, then known as SPH REIT, took an 85 per cent stake, and the local partner, then the asset management arm of investment bank Moelis, took 15 per cent, as they bought it for $206m.
Paragon REIT has been selling down assets, and this month sold The Rail Mall in Singapore. It used the proceeds to pare down outstanding debt, with the remainder to be distributed to unitholders via a special distribution.
It now has a portfolio of four assets across Singapore and Australia. Locally, it also has a 50 per cent interest in Westfield Marion shopping centre, the largest regional shopping centre in Adelaide, which it bought in 2019 for $670m.
The 21,983sq m Figtree Grove is anchored by a 24-hour Kmart, Coles and Woolworths supermarkets and two mini-majors, with 71 specialty stores, eight kiosks, an ATM and three pad sites.
JLL agents Nick Willis and Sam Hatcher declined to comment on the offer of Figtree Grove, as did the parties.
But a flyer obtained by The Australian showed its strong trading performance, with more than $200m in moving annual turnover, with almost two-thirds from grocery, fresh food and catering, health and services. Total centre productivity topped $11,000 per square metre, putting it in the country’s top 10 performers.
It has good demographic fundamentals, household incomes in its trade area are 20 per cent above the NSW non-metro average, and strong forecast population growth.
While it is a convenience-based subregional centre likely to attract income-seeking buyers, it is also suited to value-add plays due to its prime location. Figtree Grove sits on the Princes Highway on a 51,366sq m land parcel to the southwest of Wollongong’s CBD.
Paragon REIT is selling at a time when the trading of major centres is picking up in Australia. Investors have chased both regional shopping centres, with interests in Westfield assets trading, while subregional centres are also selling.
Figtree Grove is likely to appeal to both the fund managers who have been making a run in the sector, and institutions which are headed back into the market after a period of selling down.
