The Lendlease Sub-Regional Retail Fund (LLSRF) has secured the sale of Menai Marketplace in NSW and Southlands Boulevarde in WA for a total consideration of $242.5 million.
HMC Capital – the new name for HomeCo – purchased two of three shopping centres listed by Lendlease in July. JLL’s Nick Willis and Sam Hatcher and CBRE’s Simon Rooney and James Douglas managed the sale of the portfolio on behalf of LLSRF.
There was strong interest in the portfolio from an active buyer pool that was attracted to the assets having some of the most productive sales performance across the country and a dominant market position in their community. The assets are high-performing, convenience-based centres with a strong non-discretionary focus.
Matt Bowyer, Head of Mandates, Lendlease Investment Management said, “The sale of these assets is a strong outcome for our investors. Sub-regional retail assets offering this type of essential convenience continue to perform well, supporting positive investor sentiment towards the sub-sector.”
Southlands Boulevarde is a rare triple supermarket anchored daily needs centre in metropolitan Perth
Nick Willis said, “Overall transaction volumes year to date are significantly down on the record 2021 volumes that reached over $13 billion. With the sale of Caneland Central, and both these assets, total volumes are expected to reach $6 billion showing over a 50% decline in transactions. However, the sub-regional sector has attracted the greatest weight of capital. This demand for the sub-sector has been evidenced by the sheer transaction volumes with 14 sub-regional transacting, totalling approx. $1.64 billion and 5% above the 5-year average.”
Sam Hatcher added, “The sub-regional investment market emerged post-COVID as the powerhouse sub-sector of the retail investment market – the land-rich nature of these centres, diverse income profiles income and dominance within their trade areas continue to attract a deep and diverse buyer pool.”
Simon Rooney said, “A combination of investor focus shifting to convenience retail and the high-profile nature of the portfolio, generated significant enquiry, genuine buyer interest and competitive bidding, with proposed acquisition set to instil further confidence in Australia’s retail investment sector. Despite the increased cost of debt following the RBA’s tightening of monetary policy, retail spending has remained resilient at 17.9% growth to September 2022, while capital remains robust for quality, strong performing, non-discretionary focused shopping centres.”
Menai Marketplace is a highly productive asset located 30km from the Sydney CBD, within the Sutherland Shire
Southlands Boulevarde is a highly productive centre, generating $139 million in turnover per annum, with approximately 80% of income weighted to daily needs tenants. The opening of ALDI in 2023 will complement the existing Woolworths and Coles offering, making it a rare triple supermarket anchored daily needs asset.
Menai Marketplace is located in one of the most tightly held catchments in Sydney and is anchored by one of the best-performing Woolworths supermarkets in the country. The centre supports a large and established trade area with attractive fundamentals, including average household income, which is 20% above the national average.
The acquisitions of Southlands Boulevarde for $92.5 million and Menai Marketplace for $150 million represent Australia’s largest sub-regional retail portfolio transaction since 2018. Settlement is expected to occur in February 2023.
