AMP Capital funds acquire 50 per cent of Indooroopilly Shopping Centre in Queensland

The AMP Capital Shopping Centre Fund (ASCF) and the AMP Capital Diversified Property Fund (ADPF) have each acquired a 25 per cent stake in Indooroopilly Shopping Centre.

They've bought it from Eureka - Real Assets, acting on behalf of Commonwealth Superannuation Corporation (CSC), in a deal worth more than $800 million.

AMP Capital has assumed management of the super-regional centre on behalf of investors, which is located seven kilometres from the Brisbane CBD in the city’s affluent inner west.

Operational since 1970, the centre underwent a major redevelopment in 2014 and currently comprises a gross lettable area of 116,447 sqm.

Indooroopilly Shopping Centre represents a compelling investment opportunity for the funds’ investors due to its long-term asset management and development potential underpinned by leases to seven major tenants such as Myer, David Jones, Coles and Woolworths, and 14 mini majors including H&M and Uniqlo.

The asset benefits from favourable demographics, with average household income in the centre’s catchment area 22 per cent higher than the Brisbane average; good transport links; and strong trade area fundamentals including growing retail spend.

Retail spend in the area is forecast to increase from $3.2 billion currently to $3.8 billion in 2021. The centre also offers long-term mixed use development opportunities including the potential to add 90,000 square metres in gross floor area.

AMP Capital Shopping Centre fund manager Conrad Sinclair said the acquisition of a stake in Indooroopilly Shopping Centre on behalf of our investors is in line with the fund’s strategy of owning super- regional retail assets that dominate their trade area and with further potential for expansion.

"The fund’s investors now have an 81 per cent exposure to regional and super-regional shopping centres," he said.

"The deal follows a successful $200 million equity raising for ASCF, which was oversubscribed indicating the appeal these assets hold for investors.”

AMP Capital Diversified Property Fund Manager Kylie O’Connor said Indooroopilly Shopping Centre is a good fit for ADPF’s portfolio.

"It is consistent with the fund’s strategic objective to hold a diversified portfolio of high-quality assets across sectors, with a higher weighting towards regional and super-regional retail assets," she said.

"We also believe now is the right time to invest in south-east Queensland due to improving economic conditions and strong population growth in the state.”

AMP Capital has a strong presence in south-east Queensland, with a portfolio that includes the recently- redeveloped Pacific Fair on the Gold Coast.

AMP Capital Global Head of Real Estate Carmel Hourigan said Indooroopilly Shopping Centre is in the sweet spot of what AMP Capital does well for its investors.

Simon Rooney of JLL and Lachlan MacGillivray of Colliers International handled the transaction. 

They said there was a lack of transaction evidence in the regional shopping centre sector over 2015 and 2016, but three regional shopping centres have traded in 2017.

In addition to the sale of Indooroopilly, Highpoint Shopping Centre reflected a yield of 4.25% and Chatswood Chase reflected 4.75% – although both were direct off-market transactions.

Selling for a sub-4.5% yield, Indooroopilly services the inner western and southwestern suburbs of Brisbane and represents one of only four super-regional centres in Brisbane. Located in an extensive trade area comprising close to 650,000 people, Indooroopilly is a major retail destination attracting an estimated 12 million customer visits a year. 

The average per capita income in the main trade area is 30% above the Brisbane metropolitan average and the population growth in the past 5 years has been 2.3% per annum, significantly higher than the Australian average of 1.7%.

Originally built in 1970, Indooroopilly was expanded in 1987, 1998 and most recently in 2014 to approximately 116,447 sqm of total lettable area. The shopping centre is anchored by Myer and David Jones; Kmart and Target; and two supermarkets, Coles and Woolworths.

There is a 16 screen cinema; 14 mini majors; more than 300 specialty shops; and parking for close to 4,600 cars.

Its recent $450 million redevelopment, completed in 2014, included the addition of the first Uniqlo and the first H&M stores in Queensland. 

The total site area is approximately 7.8 hectares.