HomeCo boosts fund management with $242.5 million deal
David Di Pilla’s funds management group HMC Capital has splashed out $242.5 million to buy two shopping centres from Lendlease in the largest deal for the retail sector in four years.
The deal is the country’s largest subregional retail portfolio transaction since 2018, with significant investor interest generated both on a portfolio and individual asset basis. This year, the value of subregional shopping centres sales has exceeded $775 million.
Under the terms of the sale, Lendlease’s wholesale Sub-Regional Retail Fund (LLSRF) exchanged contracts for the sale of Menai Marketplace in NSW and Southlands Boulevarde in Western Australia to HomeCo.
CBRE’s Simon Rooney and James Douglas introduced HMC Capital and negotiated the sales on behalf of LLSRF, with the sale campaign jointly managed by JLL’s Nick Willis and Sam Hatcher.
The agents said the transactions reflect the demand for retail assets despite the underlying volatility of the consumer market.
HomeCo is a listed real estate group with a market value of $1.35 billion and will use the assets to launch its unlisted Last Mile Logistics (LML) fund. Menai Marketplace is the seed asset for the fund which is aiming to have about $1 billion in assets under management.
Morgan Stanley analysts said the deal was positive as the Menai centre is under-rented and HMC is confident of up to 13 per cent asset value uplift upon resetting the leases
CBRE’s head of retail capital markets – Pacific, Simon Rooney, said a combination of investor focus shifting to convenience retail and the high-profile nature of the portfolio generated significant enquiry for the assets.
“Despite the increased cost of debt following the RBA’s tightening of monetary policy, retail spending has remained resilient at 17.9 per cent growth to September 2022, while capital remains robust for quality, strong performing, non-discretionary focused shopping centres,” Rooney said.
Menai Marketplace is located in one of the most tightly held catchments in Sydney and anchored by one of the best-performing Woolworths supermarkets in the country, while Southlands Boulevarde will become one of only 10 triple supermarket-anchored centres nationally (with no DDS) when ALDI opens in early 2023.
The head of mandates at Lendlease Investment Management, Matt Bowyer, said the sale of these assets is a strong outcome for its investors.
“Sub-regional retail assets offering this type of essential convenience continue to perform well, supporting positive investor sentiment towards the sub-sector,” Bowyer said.
“The outlook for retail remains positive, with continued confidence in the sector experienced by strong sales often exceeding pre-COVID levels over the last year.”
In a separate deal, Lendlease’s Australian Prime Property Fund Retail (APPF Retail) has settled on the sale of Caneland Central in Mackay, Queensland, to Sentinel Property Group for $280 million.
The assets is a dominant 65,964 square metre regional shopping centre anchored by Myer, Coles, Woolworths, Target, Big W and a range of mini-majors and speciality tenants. The centre is the largest shopping centre in the region servicing over 175,000 people.
APPF Retail has owned and managed Caneland Central since 2001. It attracted a high level of interest from prospective buyers as it is the premier shopping and lifestyle destination in the Mackay region for the local community and tourists.
Nick Willis and Sam Hatcher from JLL managed the sale.
The APPF Retail fund manager, Anne MacSporran, Fund Manager said the centre has been a strong performer for APPF Retail due to its mix of retail, lifestyle and dining and core position at the heart of Mackay’s local community.
“Despite recent market volatility, the outlook for Australian retail remains positive, with sales remaining robust post the pandemic,” MacSporran said.
She added that APPF Retail is continuing to evolve in line with changing consumer demands and is positioning its assets to offer more mixed-use opportunities to cater to future lifestyle, technology and shopping needs.
