Quality shopping centres remain as popular as ever
Wealthy investors are putting up their capital to bet against the prevailing gloomy sentiment about retail property even as some local institutions adopt a cautious stance towards the under-pressure sector.
Listed shopping centre trusts and diversified groups that own malls are out of favour but smart private money is chasing deals in an indicator of the resilience in the best parts of the industry.
There have been some surprising moves. Just this week, an Asian-backed investor snapped up St Marys Village from Mirvac with the $68 million deal for the western Sydney centre struck at 36% above book value.
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On Thursday, a consortium of Fortius Funds Management and Singapore’s SC Capital Partners Group bought the Central Park Retail assets in Sydney for $174.5 million.
The deal, in which the groups will commit their own capital, comes amid a run of purchases by experienced retail hands with a capacity to reposition or even redevelop malls.
The pair’s purchase is partly a play on the area around Central station being transformed into a hi-tech precinct. But it also shows demand for the best centres is still quite deep.
The project, developed by Frasers Property Australia and Sekisui House Australia, as part of the overall $2bn Central Park, also displays the high performance of retail in premium high-rise buildings, which is a world away from the malaise hitting some department stores and discount department stores.
Central Park Retail comprises three assets — the Central Park Mall, DUO Retail and Park Lane Retail — that span about 14,600sqm. The mall opened in 2013 and is anchored by a Woolworths supermarket and a Palace Central cinema, with entertainment areas below the striking vertical gardens and heliostat.
Frasers Property Australia development director Mick Caddey said the centre had a diverse mix of shops, convenience and experiential retailers, set beneath one of the world’s most iconic buildings.
“The strong interest we received reflects not only the quality of the retail offer, but also the unique role it plays serving one of Sydney’s premier urban communities in a high-profile, well-patronised location,” he says.
Fortius Funds Management chief executive Sam Sproats says the purchase shows that value-adding mall plays could be made even in the best locations.
SC Capital Partners Group chairman Suchad Chiaranussati says the buy is consistent with the firm’s strategy of acquiring income-generating assets with long-term enhancement potential via repositioning.
Colliers International’s Lachlan MacGillivray says the sale shows demand for high-quality shopping centres with outstanding characteristics remains exceptionally strong.
Noosa Civic shopping centre, Norton Plaza in Sydney suburb Leichhardt and a stake in Sydney’s Westfield Burwood have been among big deals this year.
This article originally appeared on www.theaustralian.com.au/property.
