Dexus to offload Townsville mall for more than $200m
Melbourne-based fund manager Fawkner Property is in due diligence to buy the Willows Shopping Centre in Townsville from the Dexus Wholesale Property Fund for more than $200 million amid a revival in dealmaking at the top end of the retail property sector.
The 44,507-square-metre shopping centre – the largest in the Queensland coastal city – is the latest mall offering being shopped around by ASX-listed Dexus and its managed funds, following the sale of half-stakes in two Adelaide malls – Westfield Tea Tree Plaza and Westfield West Lakes – to Scentre Group for a combined $475 million and at discounts of 10 per cent or more to book value.
More broadly, retail property deal activity is picking up at the bigger end of town following a recalibration of values and yields over the past few years. The largely successful strategy employed by the likes of Scentre and Vicinity to turn their malls into premium destinations based on fresh food, entertainment and luxury brands is also improving confidence in the sector despite ongoing cost-of-living pressures.
Highlighting the return of capital to malls, this week Vicinity settled its purchase of a $420 million half-stake in Perth’s second-biggest mall, Lakeside Joondalup, from the Future Fund. Also in Perth, local mall owner Hawaiian bought out Queensland Investment Corporation’s half-stake in Claremont Quarter for $207 million, paying above book value.
It is understood that a deal for Willows Shopping Centre is being negotiated around its current book value. It could transact on a yield of more than 8 per cent.
Well-placed sources identified Fawkner Property Group as the party running the rule over the Townsville mall opportunity.
Founded by Chris Garnaut – who was contacted for comment – Fawkner has about $1.5 billion of mostly retail assets under management. Its properties are held in unlisted trusts and syndicates.
The fund manager is not afraid to write big cheques for regional malls after paying $390 million in November for Cairns Central, which was sold by a Lendlease-managed fund. In March, it paid $103 million to buy Stockland Nowra on the NSW South Coast.
Willows Shopping Centre lies about 11 kilometres from Townsville City on a 15.4ha site that includes 2700 parking bays. Included in the Dexus offering is an additional 4.4ha of development land on a nearby site.
The mall, which first opened in 1985 and underwent an $80 million expansion in 2015, is anchored by three supermarkets – Woolworths, Coles, and Aldi – and a Big W store.
It is 91.4 per cent occupied and tenants include mini-majors Best & Less, JB Hi-Fi, Planet Fitness, TK Maxx, Cotton On, and Rebel Sport, as well as 119 specialty shops. There are also 15 kiosks and seven pad sites.
The centre generated annual sales of $321 million in the year to March 2024, according to an information memorandum obtained by The Australian Financial Review.
On a fully leased basis, the mall brings in annual rental income of $17.7 million.
Rents average $984 per square metre, which is about 26 per cent lower than the benchmark for subregional centres (according to an Urbis report).
Sam Hatcher and Nick Willis from JLL and Jonathan Fox and Carl Molony from Stonebridge are listed as the selling agents but declined to comment.
It is understood Simon Rooney from CBRE is negotiating the deal on behalf of Fawkner.
A spokesman for Dexus declined to comment.
