Harvey Norman spends $100m on Melbourne homemaker centre
Retail giant Harvey Norman has added almost $100 million to its $3.1 billion property portfolio after buying Watergardens Homeplace in Melbourne’s north-west from QIC Global Real Estate.
Harvey Norman, chaired by billionaire Gerry Harvey, acquired the large-format mall site for $97 million on a low yield of 4.75 per cent, following very strong competition for the property from high-net-worth investors and institutions.
Investors have homed in on the large-format retail sector, which proved resilient during the pandemic and where retail sales are now booming on the back of a buoyant housing market.
A lack of investment-grade offerings has added heat to the market.
Harvey Norman and Bunnings are anchor tenants of the 25,931-square-metre mall, which stands on a seven-hectare site at the junction of Melton Highway and Kings Road opposite the Watergardens Town Centre, owned by QIC, and Watergardens suburban train station.
It is the second large-format centre sold this month by the Queensland government-owned fund manager.
QIC sold Robina Home + Life on the Gold Coast for $66 million to ASX-listed fund manager Primewest on a yield of about 6 per cent.
QIC Global Real Estate managing director Michael O’Brien said both malls were non-core holdings for the QIC Property Fund and the QIC Shopping Centre Fund, which jointly held them.
“These assets don’t form part of QICGRE’s broader masterplans for Robina Town Centre and Watergardens, and the adjoining strategic landparcels owned by the funds,” Mr O’Brien said.
“Both assets generated strong buyer interest and were sold at a significantpremium to book value.”
Watergardens Homeplace selling agent Lachlan MacGillivray from Colliers said the 4.75 per cent yield was the lowest yet for a large-format retail centre of this size.
“Watergardens Homeplace attracted unprecedented levels of interest, with a record number of inquiries and bidders from interested parties located nationally and overseas,” Mr MacGillivray said.
“This campaign highlights the pent-up demand for dominant, well-located trophy assets like Watergardens Homeplace; at the conclusion of this campaign there remains over $1 billion in unsatisfied capital seeking opportunities in the large-format retail sector.”
Alongside Bunnings and Harvey Norman, Watergardens Homeplace is leased to six national large-format tenants alongside two restaurant pad sites leased to Hungry Jack’s and KFC.
It sold with a weighted average lease expiry of four years.
For Harvey Norman, the acquisition of the Watergardens mall cements its position as the largest owner of large-format malls in Australia.
Harvey Norman has about a 14 per cent share of the large-format retail property market. Other major owners include ASX-listed Aventus and Home Consortium.
In February, Harvey Norman came under pressure to return almost $4 million in JobKeeper subsidies after profits and dividends more than doubled in the first half of fiscal 2021.
In its half-year update, Harvey Norman said its $3.1 billion freehold property portfolio had appreciated in fair value by $36.32 million.
