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Sydney-based property funds manager Centuria Capital Group (ASX: CNI) has wrapped up a $70 million acquisition of a sub-regional shopping centre south of Perth at a sale price that is 40 per cent below replacement cost.
The acquisition of Halls Head Central shopping centre, located at Mandurah's coastal suburb of Halls Head, builds on two existing retail assets held by the group in Western Australia’s second-largest city.
Halls Head Central, which is anchored by Coles, Aldi and Kmart, occupies a 9ha site on Old Coast Road, providing Centuria further scope to expand the asset.
The anchor tenancies are complemented by two mini-majors, 50 specialty shops and two freestanding pad sites.
Centuria, which has $3.2 billion in retail assets under management, plans to place Halls Head Central in a single-asset, closed-ended wholesale fund to be named Centuria Halls Head Central Fund.
Boasting 19,373sqm of net lettable area and sold at full occupancy and a WALE (weighted average lease expiry) of 3.3 years, the retail centre is supported by 2.4 million visitors annually.
Centuria says the acquisition is a counter-cyclical play that it has managed to secure for 40 per cent below replacement costs, based on an independent assessment.
“Halls Head Central provides a compelling, counter-cyclical investment opportunity within WA’s second-largest city, Mandurah,” says Jason Huljich, the joint-CEO of Centuria.
“The centre benefits from a high proportion of non-discretionary retailers while presenting value-add opportunities through tenant remixing or potential redevelopment.
“WA remains a standout state for retail property. Greater Perth’s population has increased by 3.6 per cent throughout the previous 12 months, and when coupled with low forecast retail supply and vacancy, it provides compelling fundamentals for the retail sector.”
Centuria’s other retail assets at Mandura comprise the Erskine Shopping Centre and Mandurah Greenfields Shopping Centre.
Head of retail Bruce McCully notes that, as a result, the group takes over management of Halls Head Central with “deep market experience within the region”.
“With limited new supply of retail assets, due to construction supply pressures, coupled with a strong population growth, we believe tenant demand will continue to outstrip supply for well-maintained subregional shopping destinations across Western Australia,” says McCully.
The Centuria Halls Head Central Fund will be open to wholesale investors with an initial five-year term. The fund is expected to provide an initial annual distribution of 8 per cent paid monthly, and a targeted 13.5 per cent internal rate of return.
The fund is targeting an equity raise of $41 million with investments starting from $100,000.
The acquisition of Halls Head Centre, negotiated by CBRE’s Simon Rooney and James Douglas, is expected to settle in July.
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