Retail boost as YFG takes full ownership of Brisbane’s Mt Ommaney Centre

YFG Shopping Centres has taken full ownership of Brisbane’s Mt Ommaney Centre, in a deal that values that asset at about $380 million and which is the largest retail property deal of the year.

The purchase is a sign of confidence in the battered shopping centre industry by one of the country’s largest private operators, although values are still expected to fall as landlords deal with demands for rent waivers and cuts and even as stores re-open.

While the value of the largest malls remains uncertain due to their exposure to fashion and other hard-hit categories the sale is a useful marker for properties that dominate their local markets.

YFG snapped up a 25% stake in the Mt Ommaney Centre last year and also took on its management from the listed Vicinity Centres.

It bought the remaining 75% interest from investment managers Nuveen Real Estate for $285 million, in a deal brokered by CBRE.

“Strategic, off-market transactions such as this, reinforce the ability for retail owners to secure competitive pricing outcomes in the current market,” CBRE’s head of retail capital markets, Pacific, Simon Rooney, says.

“We expect this trend to continue, as investors seek out high-quality, rarely traded retail opportunities offering attractive return parameters,” he says.

The YFG retail property empire, which is controlled by the Fu family, picked up its quarter stake for $94.5 million from Vicinity, and the latest deal on the remaining three-quarters essentially reflects the pre-coronavirus pricing.

The virus has prompted a near industry-wide slump and retail transaction volumes are expected to plunge this year as larger centres are particularly distressed.

But an eventual stabilisation in trading is expected to spur selling by major operators including local Westfield owner Scentre and rival group Vicinity.

The largest and most dominant shopping centre in its trade area, Mt Ommaney has a total gross lettable area of 56,469 sqm, more than 20,000 sqm larger than nearby retail centres.

Nuveen Real Estate Head of Asia Pacific, Nick Evans, says “the exit price reflects a premium to book value and is an excellent outcome for our client … in spite of ongoing headwinds for the sector”.

The centre is anchored by a triple supermarket offer of Coles, Woolworths and ALDI, together with a triple discount department store offer of Kmart, Big W and Target.

The property is benefiting from extensive population growth in the region and also sports significant future redevelopment opportunities.

It carries an approved development application for a 11,481sqm expansion, including a state-of-the-art cinema, casual dining precinct and entertainment destination, although these plans may be reworked in light of the virus.

YFG controls 20 shopping centres in southeast Queensland, including Australia Fair on the Gold Coast and Brookside Shopping Centre in Brisbane’s north.

The entire Mt Ommaney shopping centre last traded in 2014 when a joint venture including Federation Centres — that became Vicinity Centres — and US-based TH Real Estate paid $416.25 million.

In that deal, TIAA dived into Australia with the purchase of a 75 per cent interest and Federation owned 25 per cent. They bought the centre from AMP Capital.

TH Real Estate was jointly owned by TIAA-CHEF and Henderson Global Investors and later became Nuveen, the global investment manager.

Nuveen’s other retail assets in Australia include a half stake in the Greenwood Plaza in North Sydney and a 33 per cent stake in Myer Bourke Street, Melbourne.

The Mt Ommaney acquisition follows circa $1.2bn in subregional shopping centre transactions across Australia last year, including Blackstone selling the Brimbank Shopping Centre in Melbourne to a Mulpha-led syndicate for $153 million and Vicinty’s sale of Corio Central in Geelong for $101 million.

This article originally appeared on www.theaustralian.com.au/property.