Vicinity Centres divests four shopping centres in $841 million deal
Retail property group Vicinity Centres has sold a portfolio of four sub-regional shopping centres in Queensland and Victoria for $841.4 million as part of its strategy to divest from non-core assets.
The team of Blackstone and Mirvac bought the assets in a deal negotiated by JLL's Simon Rooney, and was the largest retail portfolio sale since the ING Portfolio sale in 2010, according to a media release.
The portfolio consists of Toombul and Clifford Gardens Shopping Centre, both in Queensland, and Forest Hill Chase and Brimbank Shopping Centre in Victoria. The sale reflected a weighted average capitalisation rate of 7.0%.
Vicinity sold the assets to invest in its development pipeline and for acquisitions.
The acquisition follows Blackstone’s purchase of Rundle Place and 80 Grenfell Street in the Adelaide CBD ($400 million) in December 2015, the largest in SA history and a three-centre portfolio from Scentre Group ($655.5 million) in August 2015. Blackstone and Mirvac have an existing partnership as joint-owners of Westpac Place, 275 Kent Street, Sydney (since April 2014).
“Despite yields compressing over the past 12 months, foreign investors continue to see value in Australian real estate in a global context. The relatively high yields and stable market fundamentals are key attributes that are attracting offshore funds, along with high transparency and transaction scale," said JLL’s head of Retail Investments – Australasia, Simon Rooney.
“2015 was the highest year of offshore investment into Australian retail property, with over AUD 2.4 billion being sold to foreign investors. Blackstone has been a major driver of this capital inflow in 2015, but we are also now seeing strong interest from Singaporean investors and European insurance firms and pension funds.”
Retail investment volumes in Australia rose to record levels in 2015, with over $8.4 billion in deals. Sales of sub-regional shopping centres totalled $2.8 billion in 2015, marking the third record year of investment activity for this retail sub-sector.
The portfolio comprises four well-established sub-regional shopping centres, anchored by leading national retailers which occupy approximately 87% of gross leasable area (GLA) across the portfolio.
Clifford Gardens Shopping Centre: Located within the regional hub of Toowoomba, the centre extends to a total GLA of 27,789 sqm and is anchored by Big W, Woolworths and Coles.
Toombul Shopping Centre: Close to the Brisbane CBD, the Toombul centre sits on a site area of about 98,850 sqm and has a total GLA of over 44,000 sqm. It is anchored by Coles, with other major outlets being Kmart, Target, Aldi and BCC Cinemas. Household hardware firm Bunnings is expected to open in 2017.
Brimbank Shopping Centre has a total GLA of 37,907 sqm and is anchored by Target, Coles, Safeway and Aldi.
Forest Hill Chase Shopping Centre has a Melbourne metropolitan location with a potential for further development subject to council approval. The centre extends to a total GLA of 61,470 sqm and is anchored by Big W, Target, Harris Scarfe, Coles, Woolworths, Aldi and Hoyts Cinemas.