Regional shopping centre sold for $280m

December 9, 2022

Queensland fund manager Sentinel Property has sealed a long-running deal to buy Caneland Central in Mackay from a Lendlease-run fund for about $280m.

The deal continues the Warren Ebert-led manager’s acquisition spree after it purchased two of the country’s largest centres in just a year. Sentinel splashed out almost $400m for Darwin’s Casuarina Square shopping centre in February and finalising the Caneland purchase confirms his status as a contrarian in the industry.

When he was out raising equity to back the purchase, Mr Ebert said the shopping centre was valued at $600m at its peak, and although such a steep fall-off is unlikely to be replicated across many centres it shows the dramatic rerating of retail assets.

Mr Ebert is successfully buying and raising fresh equity at a time when few others are even venturing into the larger end of the shopping centre market, with a series of campaigns to offload large retail property assets failing this year.

He has focused on buying regional malls in country centres which dominate their trade areas and have growing sales, rather than owning city malls which are under siege from e-commerce.

Caneland is a dominant 65,964sqm regional shopping centre anchored by Myer, Coles, Woolworths, Target, Big W, and mini-majors and speciality tenants. It is the largest shopping centre in the region.

When pitching the trust, Mr Ebert said there were opportunities to remix the centre and bring in new brands, from larger cities and from offshore.

His maverick approach is working so far and metropolitan-based managers are continuing to unload unwanted assets, while smaller funds houses are buying up in cities such as Wollongong.

Sentinel is also buying on attractive metrics with the deal struck on a yield of about 7 per cent and, with leverage, the syndicate holding centre could perform at an even stronger level.

Lendlease confirmed that the Australian Prime Property Fund Retail had settled the deal after owning and running the centre since 2001. “Despite recent market volatility, the outlook for Australian retail remains positive, with sales remaining robust post the pandemic. Lendlease is changing the fund so it focuses more on mixed-use opportunities to cater to future lifestyle, technology and shopping needs,” APPF Retail fund manager Anne MacSporran said.

Nick Willis and Sam Hatcher from JLL managed the sale.

Notably, the sale was the only transaction for a 100 per cent stake in a regional shopping centre to actually trade this year.

Mr Hatcher said such opportunities seldom come to market, adding that in the past decade only three of the 38 regional shopping centre assets sold were for 100 per cent interests with management rights.

Ben Wilmot | The Australian Business Review

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