Lendlease retail fund to sell half stake in Adelaide's biggest mall
Lendlease’s investment arm has put a half stake in Adelaide’s biggest mall, Westfield Marion, on the market as it looks to meet as much as $2 billion in redemption requests from its unlisted retail fund.
The 50 per cent share in the mall will be worth about $737.5 million, which is the book valuation for the remaining stake held by the shopping centre’s co-owner, Scentre Group.
The opportunity to take a significant position in one of the largest malls in the country – Westfield Marion has the 13th highest turnover nationally – will be seen as a major test for the market as property investors reassess how to best manage their exposure to the changing retail environment.
As much as $11 billion worth of malls could hit the market in coming months as landlords trim their portfolios, a glut which is almost certain to send retail values lower, according to a recent Citi analysis.
Among the investors adjusting their exposure are a number who sought redemptions from Lendlease’s Australian Prime Property Fund Retail when it opened for withdrawals at the end of last year.
The opportunity generated requests totalling $2 billion, close to one-third of the total value of the APPF retail fund’s portfolio. The Westfield Marion stake is one of the best assets in the flagship fund.
“From time to time we provide the ability for investors to access liquidity in the fund,” a Lendlease spokesman said on Monday.
“The sale of the interest in Westfield Marion is in line with the fund’s capital management strategy and provides liquidity options to satisfy the redemption requests of some investors. The manager has a range of options available to fulfil these requests.”
JLL’s Simon Rooney and Colliers International’s Lachlan MacGillivray have been appointed to broker the half stake.
The offering is bound to attract major pension funds and sovereign wealth investors. Any transaction could go close to the record set late in 2017 when two AMP Capital-run funds bought a half stake in Indooroopilly Shopping Centre for $800 million.
Scentre holds its stake in Westfield Marion on a 5.13 per cent yield and has a pre-emptive right over the remaining stake.
Categorised as a super-regional shopping centre, Westfield Marion is among the top 20 malls for the sales productivity of its specialty stores.
“Fortress assets of the calibre of Westfield Marion are very highly sought after in the international marketplace,” Mr Rooney said.
Mr MacGillivray said the latest regional mall deals have been struck on yields at or below 4.25 per cent, showing that strong demand still exists for core assets.
Straddling a 22.9-hectare site and 13 kilometres south-west of the CBD, the mall dominates Adelaide’s southern catchment.
It comprises two full-line department stores – David Jones and Myer – as well as Harris Scarfe, Big W, Kmart and Target discount department stores, Coles, Woolworths and ALDI supermarkets, an Event Cinema complex and 310 specialty stores,
