Brandon Park Shopping Centre in Melbourne sells for $135 million

Vicinity will receive $67.5 million from the sales of its 50 per cent interest in Brandon Park, which reflects a 3.8 per cent premium to the asset’s book value.

Opened in 1970, the shopping centre, on more than 58,000 square metres with about 23,000 square metres of floor area, earns a fully leased net income of $9.6 million as of November 2017.

Vicinity’s chief executive officer and managing director Grant Kelley called it “progress (in) the divestment of our non-core assets”.

“Following on from the sale of our 50 per cent interest in Toormina Gardens in January 2018, we have now agreed the sale of approximately $109 million of assets this financial year, for a combined 3.1 per cent premium to their book values,” he said.

JLL’s Australasia head of retail investments Simon Rooney, who sold the site, said Victorian retail assets were scarce and tightly held, especially those in metropolitan locations.

“Brandon Park is one of only four sub-regional centre transactions within the Melbourne metro area since 2015,” he said.

“Unlisted funds continue to be drawn to the sub-regional sector given the attractive yields available relative to premium core assets.

“Transactions of sub-regional centres dropped to $1.1 billion in 2017, less than half the $2.4 billion per annum which sold between 2013 and 2016.”

Mr Rooney added that investors were drawn to Victoria’s population growth, which is the strongest rate on record.

The sale of Brandon Park is the first sub-regional centre deal in metropolitan Melbourne since Casey Central in December 2016 for about $221 million.

The deal follows Vicinity Retail Partnership’s sale last week of their 50 per cent stake in the Grand Plaza Shopping Centre in Brisbane’s south to US fund manager Invesco for $215 million. Vicinity Centres separately retained a 50 per cent interest, including management and development rights.

Investors snapped up $8.8 billion of shopping centres in 2017, which is the second highest level on record, according to JLL’s recent Australian Shopping Centre Investment Review and Outlook 2018.

Acquisitions by offshore investors dropped 46 per cent to $1.4 billion in 2017, from $2.5 billion in 2016, JLL figures show.

“Although direct acquisitions by offshore investors declined in 2017, offshore investors contributed strongly to activity by investing indirectly into domestically-managed wholesale funds,” Mr Rooney said.