A sizeable half stake in Adelaide’s biggest shopping centre has been purchased at a discount of more than 8 per cent of its book value.
The half-interest in Adelaide's Westfield Marion shopping centre, sold by the Lendlease-managed Australian Prime Property Fund Retail, was captured by Singapore-based SPH REIT Management for approximately $670 million.
The landmark centre, one of the country’s largest, occupies a substantial 22.9-hectare site, located 13 kilometres south-west of the Adelaide CBD.
Marion is anchored by David Jones and Myer, as well as Harris Scarfe, Big W, Kmart and Target, Coles, Woolworths and Aldi supermarkets, Dan Murphy’s, Bunnings, an Event Cinema complex and 310 specialty stores.
The centre is co-owned by the owner of the local Westfield empire, the Scentre Group, that also manages the centre, but in November passed on its pre-emptive rights to take full control of the asset.
APPF, which controls a $5.7 billion portfolio of some of the country’s best malls, was forced to put its half stake in Adelaide's biggest mall on the market in April as it sought to meet as much as $2 billion in redemption requests from its unlisted retail fund.
“While the sector is evolving in response to a number of global thematics, the fundamentals for Australian retail remain positive with a long-term stable economy, continued population growth and controlled planning,” APPF fund manager David McNamara said.
Pressure has been mounting on shopping centre landlords with the emergence of online retail, overseas competitors and sluggish consumer demand accelerating the decline of easy earnings and capital growth from retail property.
Many owners have moved to remix tenancies to cater for changing consumer preferences with an increasing presence of service industries, leisure and al-fresco dining.
But for many, a shift in focus is evident. Earlier this year Vicinity Centres sold more than $630 million of neighbourhood shopping centres at a discount of more than 5 per cent to book value, while Stockland sold Brisbane's Cleveland Shopping Centre in Brisbane at a 12 per cent discount to book value.
Not all centres that have come to market have traded either. Last year, the Future Fund offered up a half-stake in Lakeside Joondalup Shopping City for about $650 million, but did not trade.
The Marion deal was brokered by Simon Rooney of CBRE and Lachlan MacGillivray of Colliers International who highlighted the asset as one of Australia’s strongest trading “fortress malls”.
“Having been historically priced out of the market by domestic funds, offshore investors are clearly attracted by the opportunity to acquire strategic interests in dominant, high-quality, 'fortress-style' retail assets,” Rooney said.
“These assets, offering best in class managers and attractive, low-volatility returns, are seldom offered to the market.”
Across the pond, Lendlease has also moved to sell a portfolio of three retail properties in New Zealand, owned through its Real Estate Partners New Zealand fund, with the assets expected to fetch more than $NZ350 million (A$325 million).
The portfolio, which is being sold in one line, comprises two outlet centres—Dress Smart Onehunga in Auckland and Dress Smart Hornby in Christchurch—and Meridian Mall, a retail asset in the Dunedin CBD.