Global asset manager PGIM Real Estate is looking to take advantage of the growing appetite for non-discretionary retail assets, listing a large format retail (LFR) centre in Melbourne’s northern suburbs two years after acquiring it.
PGIM Real Estate, the real estate investment business of PGIM, took control of Craigieburn Junction in mid-2019 after a $100 million fund-through style deal with its joint venture partners.
The 30,000sq m homemaker centre was developed on a 6.5h site at 420 Craigieburn Road in 2017 by Melbourne-based Oreana Property Group, led by Tony and Steven Sass.
The centre, anchored by major national tenants including, Nick Scali, Supercheap Auto, Freedom, a full-line medical centre, childcare and supermarket, is built around a 600-bay car park and includes a Caltex service station, Hungry Jacks drive-through restaurant and office space.
PGIM said that after multiple unsolicited approaches to acquire the asset, it decided to appoint JLL’s Nick Willis and Sam Hatcher and Stonebridge’s Justin Dowers and Philip Gartland to handle an on-market sale. PGIM Real Estate is understood to be looking for around $130 million.
“The global pandemic has accentuated the re-positioning of the ‘sectorial hierarchy’ within the Australian commercial real estate landscape,” Gartland said.
“While industrial investment has usurped almost all other commercial sectors, the attributes of the LFR sector, being the closest in configuration and simplicity to industrial, has not gone unnoticed.
“With prime industrial yields now well below 4 per cent, the attractiveness of the typical LFR asset, given its intrinsic land, lower site intensification, building attributes and yield arbitrage have all put the savvy industrial investor on high alert.”
According to JLL, the volume of LFR investment activity is up 79 per cent in the first half of 2021, to $540 million, on the constrained first half of last year.
Earlier this month, property funds manager Haben and JY Group picked up Casey Central, a triple supermarket and discount department store town centre in Melbourne’s south-east growth corridor, for $225 million.
In Geelong, Toorak-based investor David Feldman has offloaded the Coles-anchored Torquay Village for $40 million, on a yield of about 5 per cent.
In Morwell, 150 kilometres east of Melbourne, a group of private Malaysian investors sold a Coles supermarket and Liquorland plus seven non-discretionary specialty stores sold for $27.85 million on a yield of 4.9 per cent.
In Sydney and regional NSW, IP Generation, headed by Chris Lock and former Scentre executive Greg Miles, recently purchased the Lederer shopping centre portfolio for $300 million—a deal brokered by Willis and Hatcher.
The centres, predominantly leased to Coles, Woolworths and Aldi, are in Cessnock, Gosford, Richmond, Miranda, Corrimal and Goulburn.
Meanwhile, further north in Queensland, HomeCo Daily Needs REIT has spent $160 million on a retail centre and development site Victoria Point in Brisbane’s south-east.