ASX-listed developer Stockland has pocketed $143 million from the sale of two Brisbane shopping centres, redirecting the proceeds into its office and industrial pipelines.
Economic headwinds, exacerbated by concerns around the growth of ecommerce and declining business confidence are weighing heavily on the sector.
The Stockland Cleveland shopping centre and the Toowong retail and commercial centre were sold to private investors, representing a 2.9 per cent premium to combined book value.
Economists are eyeing the plethora of retail assets hitting the market from big players, as anaemic rental growth, declining business confidence and a reversing wealth effect plague the sector.
A UBS survey of more than 14,000 consumers revealed a substantial decline in the shopping frequency at Australian malls.
UBS analysts said that they don’t anticipate the disposal queue of retail assets to clear in 2019.
Stockland chief executive Mark Steinert said that the sales align with the group’s strategy of divesting non-core assets.
“These transactions take our total asset sales for the current financial year to $256.1 million, representing 64 per cent of our target $400 million of divestments already achieved within the first nine months of the stated 24-month timeframe,” Steinert said.
Stockland commercial director Louise Mason said that the property giant is on track to achieve its target of $600 million of non-core retail divestments in order to target re-weighting into office and logistics.
“We continue to strategically reposition our centres, with a focus on customer experience, place-making and retail remixing towards growth categories, to ensure the resilience of our portfolio into the future.”
The two Brisbane centres are expected to settle by 30 June, 2019.
Dexus Eyes $100m Sale for Brisbane Retail Centre
Dexus Wholesale Property Fund are looking to offload a 100 per cent freehold interest in Beenleigh Marketplace, a sub-regional shopping centre located 32-kilometres from Brisbane’s CBD.
The 19,476 square metre asset, which last transacted in 2013, is anchored by Woolworths and Big W and spans a 60,680sq m site.
The landholding also includes 4,390sq m of adjoining land earmarked for further development.
JLL head of retail investments Simon Rooney has been appointed to market the expressions of interest campaign amid weak sentiment in the retail property sector.
“Investors are pursuing a low-risk retail strategy at present,” he said.
Rooney said investors were targeting small and mid-sized sub-regional centres with a major focus on retail services along with food and beverage offerings.
“F&B has consistently been the fastest growing retail category over the last five, 10 and 20 years, which underpins solid leasing demand.”
Recent transactions for sub-regional centres include the Rockdale Plaza sale in Sydney purchased by Charter Hall for $142 million last month, Sydney’s Neeta City purchased by Elanor Investors for $85.3 million in March, and Melbourne’s Campbellfield Plaza bought by Charter Hall for $74 million in December last year.
Transaction activity was highest within the $50-million to $150-million bracket for retail property last year.
Rooney said the Beenleigh retail hub outperforms the industry averages with total centre moving annual turnover (MAT) of $113.7 million.
Beenleigh, located in the city of Logan, has a current population of 83,570 which is expected to increase 2.1 per cent annually to 2031.
The expressions of interest campaign closes on June 6.
Brisbane Northshore Building Snapped Up for $20m
Investment giant Centuria has purchased a recently built commercial building for $19.74 million on a 7 per cent yield in Northshore Hamilton.
Developed by Alceon Graystone in April last year, the three-level A-grade office building sits within the Brisbane Technology Park Northshore office precinct which spans 304 hectares of riverfront, located six-kilometres from Brisbane’s CBD.
The property fund purchased the newly built office, at 381 Macarthur Avenue, in a move that marks its first direct property acquisition.
Centuria head of real estate Jason Huljich said the purchase is in line with the fund’s strategy.
“We have always intended to acquire direct assets for the Fund, and 381 Macarthur Avenue is a high-quality, well-located asset with financially strong tenants,” he said.
Work kicked off transforming the expansive site of state-owned industrial port into a $5 billion mixed-use precinct in 2015, with the site said to be Queensland’s largest waterfront urban renewal precinct.
The next phase of commercial development to kick off will include four additional office developments spanning 16,000sq m, along with plans for an integrated health and medical precinct.
Huljich anticipates increasing investor demand in South East Queensland.
“The fund’s exposure to QLD follows our view that Brisbane office markets are steadily improving. In the last half we’ve seen yield compression, vacancy rates at five-year-lows, and rising demand for prime office – trends we expect to continue,” he said.
Centuria’s newly acquired 2,847sq m asset has a 5.1-year WALE. Colliers Sam Biggins brokered the deal, with settlement expected by the end of May 2019.
Abacus sells four sites worth $31m
Abacus Property Group is making good on its promise to exit residential projects.
The Steven Sewell-led funds manager has offloaded three residential development projects and a development site with a combined book value of $31 million.
The deal, expected to settle in June, has resulted in Abacus offloading the three sites in Melbourne and one in Queensland to an offshore developer.
The properties include an eight storey, $180 million apartment complex at 512-544 Spencer Street in West Melbourne on which Abacus was undertaking a joint venture with Lechte Corporation and Crema Group that included a 2100 square metre supermarket.
Another property offloaded was a controversial development in the Brisbane suburb of Alderley which Abacus successfully got rezoned from industrial to residential despite significant opposition from residents.
The 4.6 hectare Newmarket Brickworks site at 95-117 Mina Parade will be bulldozed to make way for 51 two-storey townhouses and 287 units across a building between two and five storeys.
Another permitted site is at 410 Smith Street, Fitzroy, one of Melbourne’s trendiest inner-city enclaves.
The group has also offloaded a site at 10-12 Hampstead Road, in the inner-west Melbourne suburb of Maidstone, itself undergoing a gentrification-led renaissance.
“This divestment demonstrates delivery of Abacus’ strategic objective of reducing exposure to residential,” Abacus said in a statement.
The settlement proceeds will be used to reduce debt, the group said.
Mr Sewell, who took over last year from industry veteran Frank Wolf, has said Abacus will grow its exposure to the self-storage sector and reduce its reliance on residential.
The deal reduces its residential holdings to just two remaining assets.
Last year it purchased an office tower at 464 St Kilda Road in Melbourne for $47.7 million in a 50-50 joint venture with Singapore’s Wing Tai group.
Other recent purchases include Sydney’s oldest cinemas, the historic Metro Theatre at 28-30 Orwell Street in Potts Point, which Abacus settled for $19.8 million.
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