Perth’s Lakeside Joondalup a part of $850m deals
The Future Fund is poised to exit about $850 million worth of retail property investments in Perth and on the Gold Coast as it capitalises its early moves in the sector made in the wake of the global financial crisis.
The $149 billion sovereign wealth fund has formally put a half share in the Lakeside Joondalup regional shopping centre in Perth on the block in a move that could garner more than $650 million, and has also exited its stake in Harbour Town Gold Coast for more than $180 million.
The shopping centre dominates Joondalup, a satellite city in northern Perth, with investors expected to be drawn to the property that offers opportunities for further retail and mixed-use redevelopment.
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The property’s value has soared since it last changed hands in 2010, when it was sold by the ING Retail Property Fund for $475 million to Lendlease’s APPF Retail and the Future Fund. The pair joined forces to win the race for the unlisted $1.6 billion ING fund’s primary asset in Perth, and also bought into the Gold Coast, with both assets substantially overhauled.
The Perth transaction came to a head after the fund’s partner, Lendlease’s unlisted powerhouse APPF Retail, waived its rights to take full ownership of the prize asset, opening the way for a new group to buy into the asset in a process revealed by The Australian last month.
However, the $4.6 billion unlisted fund has taken up the 25% interest in Harbour Town Gold Coast, lifting its holding to a half stake in the nation’s largest outlet centre.
The deal, understood to have been struck at a sub-5% initial yield, will reverberate through the outlet centre sector, rerating holdings of sector landlords.
APPF Retail will co-own the Gold Coast centre 50-50 with Lewis Land Group. It spans a gross lettable area of about 55,225sqm and is anchored by a Woolworths supermarket and Reading Cinema, alongside 14 mini-majors, 221 specialties and kiosks and a McDonald’s pad site.
With a moving annual turnover of more than $440 million, it is well positioned to benefit from its fast-growing trade area that is forecast to grow by 2% a year to hit 742,640 people by 2036.
The Perth offer is being handled by JLL’s head of retail investments, Simon Rooney, who says Lakeside Joondalup is WA’s top shopping centre with moving annual turnover of $707 million.
The regional centre comprises a gross lettable area of more than 99,000sqm and is anchored by Myer, Kmart, Big W, Target, Coles, Woolworths, Aldi and Grand Cinemas, with 12 mini-majors, 283 specialties and kiosks, an office tenant and six pad site tenants.
Rooney says demand for core assets such as Lakeside Joondalup remained strong with more than $3bn worth of regional shopping centres having transacted in the past 12 months. These included AMP Capital buying a half share in Indooroopilly in Queensland for $800m, Scentre picking up a half share in Westfield Eastgardens in Sydney for $720m and QIC taking a half share in Melbourne’s Pacific Epping and Pacific Werribee for $1bn.
“Regional shopping centres in Perth are tightly held, rarely traded and are highly sought, given their high rate of sales productivity relative to similar assets in other states,” Rooney says.
The last regional centre to trade in WA was a one-third share in Karrinyup Shopping Centre, which UniSuper acquired from Westfield in 2013 for $246.7 million.
“There are tangible signs of a recovery in the WA economy,” Rooney says.
This article originally appeared on www.theaustralian.com.au/property.
