Parkstone Funds Management, in partnership with fund manager Centennial, has exchanged contracts to purchase Bundaberg’s biggest and highest-performing retail precinct, the Hinkler Central Shopping Centre, for $107 million from QIC Real Estate.
The 21,000m2 centre located in Maryborough Street is anchored by Woolworths, Kmart and Coles and includes a further 65 retail and dining spaces.
The acquisition of Hinkler Central comes at a time when the sector is beginning to see somewhat of a resurgence in the demand for dominant centres offering healthy yields for investors. The centre’s gross lettable area (GLA) and moving annual turnover (MAT) metrics position it among the Top 10 Little Gun centres nationally.
The strategic move marks a major milestone for Parkstone Funds Management and Centennial in further strengthening their presence in the retail property sector. It has allowed Parkstone to tap into Centennial’s extensive funds management experience and well-established investment platform, while Centennial has leveraged Parkstone’s and Holdfast’s deep expertise in the retail property sector.
Centennial Executive Director Paul Ford said: “The Hinkler Central Shopping Centre purchase aligns with our strategic vision to acquire off market, high-performing, dominant land-rich regional centres at favourable yields and well below replacement cost.
“We are delighted to be participating in the acquisition of such a high-quality investment that offers a very attractive distribution yield while comprising quite defensive characteristics.”
Hinkler Central is anchored by Woolworths, Kmart and Coles
Parkstone Funds Management Managing Director, Tim Wilkin, said the acquisition, executed after a thorough due diligence process, reflected Parkstone’s commitment to identifying and capitalising on compelling retail investment opportunities.
“The acquisition of the Hinkler Shopping Centre significantly bolsters our group’s exposure to sub-regional centres while further enhancing our portfolio’s overall quality and diversification,” said Wilkin.
“The strength of the Bundaberg region and this 21,000m2 centre is exceptional. It has an occupancy of 99%, of which about 94% of GLA is national retailers. The centre’s metrics position Hinkler Central among the top 10 nationally in its class.
“We consider it an excellent yield and growth play because of the high barriers to entry in this market, being acquired approximately 30% below replacement cost. There also exists further opportunity to enhance the centre in terms of development, which when combined with the ability to access positive rental reversion, should be well supported by the substantial government infrastructure spending currently in progress and planned for Bundaberg, aligning very well with the forecast investment horizon for this asset.
“The resilience and attractiveness of sub-regional shopping centres adds a further level of optimism to our regional investment strategy. Centres of this quality serve as important community hubs and have demonstrated proven resilience through some challenging times in recent years. We look forward to delivering continued growth for this asset.”
Centennial Chief Executive Officer, Adrian Taylor said: “We are very excited to have formed this strategic retail partnership with Parkstone.
“The acquisition underlines Parkstone’s and Centennial’s proactive approach to seizing off-market opportunities with similar characteristics in the market. This is the first of what we anticipate will be a broader partnership that will position us as a major player at scale in this space.”
The transaction was handled by Sam Hatcher and Jacob Swan of JLL.
Commenting on the current market, Sam Hatcher said: “The retail thematic is well and truly validated by continued strength in tenant performance, limited floor space supply across all sub-sectors and heightened deal flow aiding underwriting.
“Funding for retail remains positive given the diversification of income providing stable interest cover ratio’s in comparison to other traditional assets classes which are often linked to a one or two major tenant expires,” said Hatcher.
Hinkler Central features more than 1,000 mostly undercover parking bays with direct travelator access, and its specialty tenant mix is orientated to ‘consumed on site’ products and services such as banking, medical, food and beauty, which increases dwell times.
The centre is well-located in Queensland’s second-fastest growing city with 7.1% economic growth and nominated as number one for region-to-region relocations.
