Abacus Offloads Liverpool Mall as Retail Growth Slows

Abacus is the latest property group to offload non-core retail, selling the sub-regional Liverpool Plaza for $46 million to a local investor.

The ASX-listed property group flagged plans to shift its focus to super convenience, office and self-storage in its half-yearly results.

The 64 per cent occupied Liverpool Plaza offers a gross lettable area of 7,921sq m and is on the book on a 6.25 per cent cap rate.

Abacus’ latest sale comes less than a week after fellow listed developer Stockland pocketed $143 million from the sale of two Brisbane shopping centres.

Abacus initiated a joint venture deal with property investor ISPT last year to sell a 50 per cent stake in two of its super convenience retail assts — the Ashfield Mall in Sydney and Lutwyche centre in Brisbane — in a deal worth $155 million.

The group has also struck strategic development partnerships with Heitman, Wing Tai and Salta as part of a new capital partnering business initiative.

Related: Deteriorating Outlook Hits Developers in Residential, Retail Sectors

Retail to get worse before it gets better

The retail sector ended 2018 on a weak footing, with Deloitte forecasting retail turnover growth will fall from 2.2 per cent growth in 2018 to 1.6 per cent this year.

In Deloitte’s retail forecasts report, analysts predict that while growth will lift back to 2.2 per cent in 2020, weakness in the housing market will weigh heavily on consumer spending.

“Australia’s retail sector has been sustaining a reasonable rate of sales growth in an unconventional way – not so much from income growth, but leveraging off consumers’ willingness to spend,” Deloitte retail forecasts principal author David Rumbens said.

“That willingness to spend has been supported by very strong asset price growth, creating a massive windfall for one set of consumers.

“But for another, and largely separate group, they have been associated with a significant lift in debt commitments.”

Economic headwinds, exacerbated by concerns around the growth of ecommerce and declining business confidence has created a big market, with a huge $9.21 billion of retail assets transacting in 2018 — the second largest year on record.

Sub-regional and regional centres accounted for almost half of all listings.

Abacus joins Stockland and Vicinity Centres in moving to divest non-core retail assets. Vicinity is offloading up to $1 billion of non-core sub-regional and neighbourhood assets.

Abacus said the approach to acquire Liverpool Plaza was unsolicited. Settlement is due by 9 December 2019.