Stake in WA’s largest shopping centre up for grabs
The Future Fund is looking to reduce its exposure to Perth’s strongly performing retail market through the offer of its stake in the $1.2 billion Lakeside Joondalup Shopping City.
West Australian assets are attracting strong interest as confidence returns to the resources sector and spending increases, bucking the trend of slow specialty sales in some markets.
The Future Fund’s stake will hit the open market once it determines its position with the co-owner, a Lendlease-managed fund. It is expected to be chased by majors such as Scentre, Vicinity Centres, QIC, AMP Capital and GPT as well as more passive owners seeking to partner with Lendlease.
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The shopping centre dominates Joondalup, a satellite city in northern Perth, and offers opportunities for further redevelopment. Originally developed by ING Real Estate and opened in 1994, it has been through three major expansions.
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, which had joined forces specifically to win the race for the unlisted $1.6 billion ING fund’s primary asset.
When it last changed hands, the complex comprised three supermarkets, three discount department store and a cinema-based centre across 71,142sqm. Major tenants included Woolworths, Supa IGA, Coles, Target, Big W, Kmart, and Grand Cinemas, plus 246 other tenancies.
The owners jointly undertook a $330 million redevelopment, transforming it into WA’s largest shopping centre. It now has an area of 99,600sqm and a 12,000sqm Myer, Perth’s first next-generation Coles, an Aldi supermarket, WA’s first H&M store and 800 more parking spots.
APPF Retail, which says it owns 50% of the asset alongside a mandate client, declined to comment.
The Future Fund has been reducing its exposure to Australian shopping centres at a time when they are attracting interest from global investors.
The Lendlease vehicle is Australia’s largest wholesale retail fund with interests in 11 shopping centres worth more than $5 billion. It could weigh up either buying out the Future Fund or introducing a new partner to the centre.
Perth’s retail market has attracted strong interest from landlords and there is a series of major shopping centre expansions under way involving AMP, Vicinity, Perron Group and Scentre.
AMP is spending $600 million on redeveloping Karrinyup Shopping Centre and it will outlay $750m on Garden City, Booragoon; Scentre’s Westfield Carousel has a $235m expansion plan, a $450m boost to Westfield Innaloo is slated and works at Westfield Whitford City are under way; and Vicinity has a $350m project at Mandurah Forum.
The Future Fund has been reducing its exposure to Australian shopping centres at a time when they are attracting interest from global investors.
New players including US funds giant Invesco and Britain’s M&G Real Estate have forged deeper into the local retail property market alongside major domestic groups.
Retailers are dealing with the rise of Amazon but deals for holdings in valuable centres are still being struck at very tight levels, with GPT Group taking full control of Melbourne’s Highpoint and AMP Capital buying a stake in Indooroopilly Shopping Centre in Brisbane.
The Vicinity Retail Partnership, backed by the Future Fund and the Canada Pension Plan Investment Board, last year sold a half-stake in Rockingham Shopping Centre, south of Perth, for $305 million to AMP and a half-stake in the $430 million Grand Plaza Shopping Centre in Brisbane’s Browns Plains to Invesco.
JLL head of retail investments for Australasia Simon Rooney is handling the latest deal but declined to comment, as did the sovereign fund.
This article originally appeared on www.theaustralian.com.au/property.
