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Managed property investment fund EG’s Australian Core Enhanced (ACE) Fund is now valued at more than $1 billion after it acquired a half stake in the Grand Plaza shopping centre in Browns Plains, Logan City as part of a deal understood to be worth $215 million.
Vicinity Centres (ASX: VCX) will hold onto the remaining 50 per cent of the centre, with agents CBRE claiming the sale represents further evidence of the heightened demand for suburban retail investment opportunities.
Just last week, Business News Australia reported the Benowa Gardens shopping centre on the Gold Coast sold at a 50 per cent premium to what former owner IJ Capital paid in early 2020, while neighbourhood and sub-regional shopping centre owner Shopping Centres Australasia Property Group (ASX: SCP) reported a 320 per cent profit lift in its latest half.
CBRE’s head of retail capital markets - Pacific, Simon Rooney, who negotiated the transaction on behalf of US investment manager Invesco, said the sub-regional shopping centre market was being fuelled by the attractive yields these types of properties produce.
“There has been a surge in capital flows into the sub-regional sector, fuelled by a rebasing in values and rents and the attractive yields on offer compared to other asset classes,” Rooney said.
“The Grand Plaza transaction also highlights continued strong demand for Queensland retail investments, with over $4.5 billion in sales occurring since the beginning of 2021.”
CBRE says the transaction was struck at an acquisition core capitalisation rate of close to 5.25 per cent.
The Grand Plaza Shopping Centre is located 22km south of the Brisbane CBD, has a gross lettable area of 53,288sqm and is anchored by three supermarkets (Woolworths, Coles and Aldi) together with Kmart, Big W, Target and Event Cinemas.
Major, national and chain retailers represent 94 per cent of the total lettable area and approximately 92 per cent of the gross passing income.
“Value can be extracted from this asset with an active asset management strategy to enhance the retail offering and tenant mix,” EG head of capital transactions Sean Fleming said.
“Based on the data EG has interrogated, Grand Plaza mall is expected to benefit from the anticipated capital growth and cap rate compression across Australian retail markets in 2022.”
Post-acquisition, EG's fund now owns 14 core-plus assets across Australia in Sydney, Brisbane, Melbourne and Perth, eight of which were purchased in the last 12 months.
"It was a case of acting quickly and intelligently when the pandemic triggered an abrupt reset of values and we identified the opportunity to grow a diversified portfolio of office, retail and industrial assets worth over $1 billion for our investors,” ACE fund manager and executive director Chris Pak said.
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