Super funds and retail investors are ready to plough more than $1 billion into shopping centres in the coming weeks as they compete for a range of portfolios.
Lend Lease’s wholesale Real Estate Partners 3 (REP3) fund has placed its retail assets on the market with a value of more than $500 million. They include two NSW centres - Menai Marketplace in Sydney’s south and Settlement City in Port Macquarie - and three centres in Western Australia - Armadale Shopping City south-west of Perth, Southlands Boulevarde south of Perth and Northgate Shopping Centre in Geraldton.
The fund has reached the end of its set period.
The likely buyers include ISPT, CFS Retail, Charter Hall and Cbus. Overseas investors such as the Canada Pension Plan Investment Board and Middle East-based trusts are also expected to be interested, more in partnership with an Australian buyer.
In the next week, it is expected Mirvac will settle on the Birkenhead Point mall and marina for about $310 million, while a number of parties are looking closely at the retail component of the office site at Greenwood Plaza in North Sydney, valued at about $200 million.
The Lend Lease REP3 portfolio is being sold through Simon Rooney, Jones Lang LaSalle’s Australian head of retail investments, and Antony Green, director of Macquarie Capital Investors.
It is expected that once the new business has been consolidated, Scentre chief executive Peter Allen will review his portfolio of 47 malls in Australia and New Zealand.
Mr Allen would look for passive investors for a stake in the shopping centres, so as to maintain the management and development rights.
Despite the flatness of the underlying consumer demand, malls are in high demand. That was evidenced by the recent deals by Dexus Property, which paid $160 million for two NSW regional malls.
Under the deals, Dexus Wholesale Property Fund paid $98.5 million for Deepwater Plaza in Woy Woy and $61.2 million for Sturt Mall in Wagga Wagga, through Mr Rooney and Steve Lerche, Savills national director, retail investments.
Mr Rooney said there is currently strong market appetite for portfolios of malls.
‘‘The timing is highly opportunistic, coming off a record 2013 for retail transactional activity and continuing unabated demand from both domestic and offshore interests,’’ Mr Rooney said.
‘‘Many significant investor mandates remain unsatisfied. We are seeing consistent sentiment from these parties who are seeking to buy in the current cycle.’’
He said the larger portfolios enable investors to build scale and a management platform quickly and efficiently in a market where prime investment opportunities are becoming increasingly scarce.
Jones Lang LaSalle research shows investment in the sub-regional shopping centre sector has been steadily rising.
Total sub-regional transactions in 2013 reached a record high of $1.8 billion, above the previous record of $1.2 billion in 1997.
