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Published On: Thu, Oct 26th, 2017

AMP Capital eyes $1bn stake in Brisbane’s Indooroopilly Shopping Centre

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AMP Capital is looking to stamp its authority on Brisbane’s retail property market with the purchase of a $1 billion stake in the Indooroopilly Shopping Centre.

The group, which already manages one of the best shopping centre networks in the country, is believed to be heading the field to buy the Commonwealth Superannuation Corporation’s half stake in Indooroopilly Shopping Centre, marking one of Australia’s biggest shopping centre deals this year.

It is also a sign of confidence in shopping malls, which remain under pressure from the general downturn in retail sales and the looming threat from Amazon as it plans an entry into the Australian market.

The offer of the interest attracted a who’s who of Australian retail property with Scentre, GPT Group and a tie-up between ISPT and Stockland showing interest, as well as local heavyweight QIC and the John Gandel-backed Vicinity centres.

The stake was offered, via Simon Rooney JLL and Lachlan MacGillivray of Colliers International, with valuable management rights attached, and was the first such sale of a super-regional shopping centre in more than a decade.

If AMP Capital is able to finalise a deal, it will have the chance to bolster the performance of the centre, which could be redeveloped in parts and repositioned to also accommodate international retailers that are a feature of the group’s other major centres in Sydney, the Gold Coast, Perth and Melbourne.

Scentre, which has a dominant position in the city, had said would look at the property and is rumoured to have shown interest in buying the entire landmark centre.

It would have held a dominant position in the city but now could face a challenge from AMP Capital that will be looking to revitalise the centre.

Funds manager Eureka Real Assets, which acts as the investment manager for the $41bn super scheme for public servants and the Defence Force, in June began a sale process for the massive 116,000sq m retail complex.

CSC has owned the Indooroopilly Shopping Centre in its own right since 2006, after acquiring an initial interest in 1988. Its annual retail turnover is $667m.

It completed a $450m renovation in 2014 following a 30-month process to expand the centre from 86,780sq m.

It now has two department stores, Myers and David Jones, a Kmart and Target, Coles and Woolworths, a 16-screen cinema and more than 350 shops. The centre’s vacancy rate is less than 1.5 per cent.

Indooroopilly is the pre-eminent centre servicing the inner western and southwestern suburbs of Brisbane and the impending sale will set fresh benchmarks across the sector.

Australia’s shopping centre sector is split between soaring values for key assets and sluggish growth for smaller assets.

The strong result in the race for the CSC’s half-stake in the Indooroopilly bodes well for the valuations on many of best malls held by listed groups.

The Brisbane centre also has significant upside in the medium term as apartments can be developed around it and AMP is pursuing a strategy to build town centres with residential units around is centres in Sydney and Perth.

The parties and agents declined to comment.

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