Blackstone pulls trigger on Top Ryde retail centre, expecting $700m
The world’s largest property investor Blackstone is selling its first ever retail property purchase in Australia – the Top Ryde City shopping centre in Sydney’s north west, which it bought from receivers five years ago for $341 million.
The private equity group has spent about $90 million on the Top Ryde complex, bringing the total shopping area to 76,958 square metres. It is now likely to sell for about $700 million, or a yield of about 5 per cent, making it easily the biggest retail asset to sell this year.
‘Buy, fix, sell’ strategy
While there has been concern about the health of retail property more broadly, Blackstone’s decision to sell is driven by its ”buy, fix, sell” strategy.
Blackstone took the once distressed asset and replaced its underperforming Myer with a Coles, Harris Scarfe and TK Maxx resulting in a 215 per cent increase in moving annual turnover (MAT) for the replaced space – a key measure in the profitability of retail property. The redevelopment boosted foot traffic and overall income for the centre and leaves significant upside growth for a range of buyers likely to be domestic and offshore institutional investors.
Having been successfully repositioned towards a non-discretionary spend, Top Ryde City has seen overall MAT and traffic growth of 40.7 per cent and 31.4 per cent respectively since 2012.
Blackstone did go to the market last year attempting to sell a portfolio of regional and sub-regional shopping centres valued at more than $3 billion, however that sale process stalled and the assets are likely to be sold off in a piecemeal fashion.
Its portfolio in Australia and New Zealand also included Melbourne’s Greensborough Plaza and centres acquired (alongside Mirvac) in 2016 from Vicinity Centres.
Top Ryde will be sold exclusively through JLL’s head of retail investments for Australasia, Simon Rooney, who declined to comment on the upcoming process.
Comparable sales
Sitting 12 kilometres from the Sydney CBD, the centre includes a Coles, Woolworths, Aldi, Kmart, Big W, Harris Scarfe, Event Cinemas, 20 mini majors, 200 specialties and kiosks, and parking for 2925 cars.
Some of the big latest comparable shopping centre deals include AMP’s purchase of Indooroopilly in Brisbane for $800 million and GPT’s unlisted fund’s $680 million purchase of a 25 per cent share in Highpoint, Melbourne. Both deals reflected pricing of about 4.25 per cent.
Blackstone has been selling other property assets. It sold an office tower at 1 Castlereagh Street in Sydney and has struck a deal to sell a Brisbane office tower to Singapore’s Firmus Capital for about $130 million.
