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One of the largest shopping centres in Far North Queensland has been offloaded by property giant Lendlease (ASX: LLC), which has agreed to sell Cairns Central to Melbourne-based fund Fawkner Property for $390 million.
With a gross lettable area (GLA) of 51,972sqm, the centre has a diverse retail mix with more than 186 tenants, including Myer (ASX: MYR), Coles (ASX: COL), Kmart, Target and Event Cinemas. In 2021, Cairns Central completed a $60 million redevelopment that led to the introduction of a new Woolworths (ASX: WOW) and ‘Food Hall’ precinct.
The acquisition comes two months after Fawkner agreed to purchase Midland Gate Shopping Centre in Perth with PAG, which settled for $465 million – making it one of Australia’s largest retail transactions in 2023. Last month also saw the management fund snap up the Settlement City Shopping Centre in Port Macquarie for $107 million.
Under the latest agreement, Fawkner Property will purchase Cairns Central from Lendlease-managed Australian Prime Property Fund Retail (APPF Retail).
“As the fundamentals continue to reset for high quality retail assets and the sector moves into a clear growth phase, domestic private capital and increasingly offshore institutional investors, are strategically teaming up with specialist domestic managers like Fawkner Property and are proactively engaging and seeking out high-quality regional shopping centre opportunities prior to this window closing,” said CBRE's Simon Rooney, who advised and represented Fawkner Property on the deal.
“Opportunities to acquire a 100 per cent freehold interest in a market leading regional shopping centre with management rights are rarely presented. Fawkner Property securing two such opportunities at Midland Gate Perth and Cairns Central demonstrates their strategic and counter-cyclical investment approach.”
According to Lendlease, APPF Retail attracted a high level of interest from prospective buyers for Cairns Central, which was sought after due to its location in one of Australia’s largest regional cities with strong growth forecasts.
“The sale of Cairns Central is a strong result for APPF Retail investors, particularly in light of market conditions experienced throughout 2023,” Lendlease APPF Retail Fund Manager Anne MacSporran said.
“With the strategic divestment of this asset, APPF Retail will be able to close out the remaining redemption requests in the Fund, providing liquidity to those investors who requested it.”
“The outlook for Australian retail is positive. With sales having rebounded strongly post pandemic, and now stabilising to more normalised levels, the sector is supported by robust retail fundamentals, with growing demand and limited supply of retail space being one of the driving forces for future growth.”
The sale was managed by Lachlan MacGillivray of Colliers International and Sam McVay of McVay Real Estate, and is expected to settle in late February 2024.
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