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News release

AUSTRALIA

Vicinity in $841.4m shopping centre disposal: Largest retail portfolio sale since 2010

Blackstone and Mirvac team up to successfully acquire major portfolio of four shopping centres in Queensland and Victoria


JLL's Simon Rooney has exclusively negotiated on behalf of Vicinity Centres, the sale of the largest portfolio & retail disposal since the ING Portfolio sale in 2010. The portfolio included four major sub-regional shopping centres totalling AUD 841.4 million. The sale reflected a weighted average capitalisation rate of 7.0%.

The portfolio consists of Toombul and Clifford Gardens Shopping Centre, both in Queensland, and Forest Hill Chase and Brimbank Shopping Centre in Victoria. Vicinity Centres sold the shopping centre assets as part of its ongoing divestment initiative to sell down assets non-core to its portfolio strategy on the basis that more value could be created by investing in their development pipeline and selective acquisitions.

The acquisition of the portfolio by Blackstone and Mirvac follows Blackstone's purchase of Rundle Place and 80 Grenfell Street in the Adelaide CBD (AUD 400 million) in December 2015, the largest in SA history and a three-centre portfolio from Scentre Group (AUD 655.5 million) in August 2015. Blackstone and Mirvac have an existing partnership as joint-owners of Westpac Place, 275 Kent Street, Sydney (since April 2014).

JLL's Head of Retail Investments – Australasia, Mr Rooney said, "Capital partnerships continue to develop between foreign investors and domestic institutions who have specialised, local management expertise in order to access portfolio transactions of significant scale. We expect this trend to continue in 2016.

"Despite yields compressing over the past 12 months, foreign investors continue to see value in Australian real estate in a global context. The relatively high yields and stable market fundamentals are key attributes that are attracting offshore funds, along with high transparency and transaction scale.

"2015 was the highest year of offshore investment into Australian retail property, with over AUD 2.4 billion being sold to foreign investors. Blackstone has been a major driver of this capital inflow in 2015, but we are also now seeing strong interest from Singaporean investors and European insurance firms and pension funds," said Mr Rooney.

Retail investment volumes rose to record levels in 2015, with over AUD 8.4 billion of retail assets transacting nationally. Sales of sub-regional shopping centres totalled AUD 2.8 billion in 2015, marking the third record year of investment activity for this retail sub-sector.

The portfolio:

The Portfolio comprises four well established sub-regional shopping centres, offering security of income and tenure, anchored by some of Australia's largest national retailers which occupy approximately 87% of GLA across the portfolio.

Clifford Gardens Shopping Centre: Located within the regional hub of Toowoomba, capturing an extensive main trade area population and high spending catchment. The centre extends to a total GLA of 27,789sqm and is anchored by Big W, Woolworths and Coles together with an exceptionally strong representation of national retailers.

Toombul Shopping Centre: Strategically located 7km north-east of Brisbane CBD and 6km from Brisbane Airport. Toombul is situated in a growing inner urban area and benefits from its close proximity to major roadways (including the recently completed Airport Link tunnel) and public transport links. The centre, which sits on a site area of approximately 98,850sqm, has a total GLA of over 44,000sqm. It is anchored by a strong performing Coles, as well as Kmart, Target, Aldi and BCC Cinemas, with household hardware giant, Bunnings, expected to open in 1H17.

Brimbank Shopping Centre: Located on a prominent corner site, the centre is a strong performing, dominant convenience based sub-regional centre with strong retail expenditure. The centre extends to a total GLA of 37,907sqm and is anchored by Target, Coles, Safeway & Aldi.

Forest Hill Chase Shopping Centre: Exceptional Melbourne metropolitan location with a potential value add opportunity to redevelop the car park site and offices into medium density residential (STCA). The centre extends to a total GLA of 61,470sqm and is anchored by Big W, Target, Harris Scarfe, Coles, Woolworths, Aldi & Hoyts Cinemas.