AMP Capital funds acquire a 50 percent stake in the super-regional retail asset in Brisbane.
The AMP Capital Shopping Centre Fund (ASCF) and the AMP Capital Diversified Property Fund (ADPF) have each acquired a 25 percent stake in Indooroopilly Shopping Centre (Indooroopilly) with management rights in a deal worth more than $800 million. Sold by JLL and Colliers International on behalf of Eureka - Real Assets, acting in its role as investment manager for Commonwealth Superannuation Corporation (CSC).
In addition to being the biggest single-asset retail transaction, Indooroopilly represented the first super-regional shopping centre to be sold via an on-market campaign since 2010 and is the first super-regional shopping centre sale with management rights in over a decade. Simon Rooney of JLL and Lachlan MacGillivray of Colliers International handled the transaction.
JLL’s Head of Retail Investments – Australasia, Simon Rooney said, “We received significant domestic and offshore interest in Indooroopilly. Dominant super-regional shopping centres are rarely traded, tightly held and the opportunity to gain management rights was a major attraction to the leading industry operators looking to expand their platform.
“Investors globally are focusing on major shopping centres which dominate their trade area and offer customers an all-encompassing retail offering. Given the accelerated rate of change in global retail trends at present, investors are positioning their portfolios towards highly resilient assets which can outperform by delivering solid risk-adjusted returns.
“With Indooroopilly, investors were attracted to the potential to materially add value to the existing centre and capture long-term mixed-use development opportunities on the site – a trend we are seeing across the broader retail sector.
“The sale of a 50 percent share in Indooroopilly is further evidence of a strong and growing trend to joint venture transactions. We’ve had a number of major assets offered for sale in 2017 on a joint-venture basis. In addition to Indooroopilly, Rockingham Shopping Centre was also offered on a 50% basis, sold to AMP for over $300m and GIC & Vicinity Centres entered into a $1.1 billion swap transaction for 50% interest in three Sydney CBD assets with management rights for a 49% share in Chatswood Chase”.
Colliers International’s Head of Retail Investment Services – Australia, Lachlan MacGillivray said, “By divesting a part-share in large individual assets, vendors are able to retain an interest in these quality assets but can also unlock capital for re-deployment into other opportunities and can diversify their portfolio across multiple assets and states.
“Indooroopilly was the first highly competitive on-market test for pricing benchmarks in the last few years. 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 shopping centre is a consistently strong performer and enjoys an affluent trade area, underpinned by attractive demographic characteristics. 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 two Department Stores, Myer and David Jones; two Discount Department stores, Kmart and Target; two supermarkets, Coles and Woolworths; a 16 screen cinema; 14 mini majors; more than 300 specialty shops; and at-grade and covered parking for close to 4,600 cars. The 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 and includes surrounding, highly strategic land holdings, offering further development potential. The area is identified as a Principal Regional Activity Centre, permitting mixed use redevelopment on the ancillary land.