Lendlease Retail Centres Sell-Off Tops $520m

Lendlease has moved along three shopping centres in deals totalling north of $520 million across three states.

HMC Capital Managed Funds has acquired from Lendlease’s Sub-Regional Retail Fund two centres, Southlands Boulevarde in Perth, for $92.5 million, and Menai Marketplace, Sydney, for $150m, for a total of $242.5 million.

According to CBRE, whose Simon Rooney and James Douglas introduced HMC Capital and negotiated the sales on behalf of Lendlease, this is Australia’s largest sub-regional retail portfolio transaction since 2018.

JLL’s Nick Willis and Sam Hatcher and CBRE’s Simon Rooney and James Douglas managed the sale of the portfolio.

CBRE said there had been significant investor interest on a portfolio and individual asset basis, which highlighted the continued investor focus on sub-regional shopping centres with more than $775 million in assets transacted so far this year.

Southlands Boulevarde in the southern suburb of Willetton is anchored with Coles and Woolworths supermarkets, and an Aldi will open there early next year.

Forecast to settle in February, the centre has a 96 per cent occupancy rate and income WALE of 5.9 years.

Menai Marketplace is about 30km south of the Sydney CBD is anchored by a Woolworth supermarket. Settlement is also predicted for February.

“Despite the increased cost of debt following the RBA’s tightening of monetary policy, retail spending has remained resilient at 17.9 per cent growth to September 2022, while capital remains robust for quality, strong performing, non-discretionary focused shopping centres,” Rooney, CBRE head of retail capital markets, Pacific said.

▲ Menai Marketplace south of the Sydney centre has sold for $150 million.

Meanwhile, a major central Queensland shopping centre has changed hands for $280 million.

Sentinel Property Group has acquired a 100 per cent interest in Mackay’s Caneland Central Shopping Centre, with management rights.

The acquisition bolsters Sentinel’s $1 billion-plus commercial real estate portfolio in northern Australia and takes its investment in retail centres during 2022 to more than $700 million.

The sale is the only transaction for a 100 per cent stake in a regional shopping centre in 2022, according to JLL, whose retail investments team of Willis and Hatcher handled the sale on behalf of Lendlease’s APPF Retail Fund via an international expressions-of-interest campaign.

Caneland Central is the largest shopping centre north of the Sunshine Coast, with a GLA of 66,000 square metres.

The Lendlease managed Australian Prime Property Fund Retail has held the mall since 2001.

Securing Caneland Central follows Sentinel earlier this year snapping up Darwin’s Casuarina Square shopping centre for $418 million in the syndicator’s biggest deal since it was established in 2010. Both sales were brokered by Willis and Hatcher.

The Caneland Central purchase price resulted in a passing yield of 7.7 per cent. The WALE on the major tenants is 5.7 years, while the centre has a MAT of approximately $393 million, representing a growth of 22.5 per cent since 2017.

The centre is anchored by a Myer Department Store, Woolworths and Coles supermarkets, and Big W and Target discount department stores while supported by about 180 specialty retailers.

 “Opportunities to acquire a 100 per cent stake in major regional shopping centres seldom come to market,” Hatcher said.

“In the past 10 years, only three of the 38 regional shopping centre assets to have sold in Australia have been for a 100 per cent interest with management rights.”