Vicinity Centres has outlaid $420 million for a 50% stake in Western Australia’s coveted Lakeside Joondalup in Australia’s largest 2024 retail transaction. The exchange of contracts and settlement occurred on 19 August 2024, with the transaction being funded by a mix of existing debt facilities and asset divestment proceeds.
CBRE’s Head of Retail Capital Markets Simon Rooney acted on behalf of the Future Fund to sell the stake, with the remaining interest in the landmark centre owned by Lendlease’s APPF Retail Fund.
As part of the transaction, Vicinity has also secured the property and retail development management rights for Joondalup.
Vicinity’s CEO and Managing Director, Peter Huddle said, “Lakeside Joondalup is a fortress-style retail asset located in one of Perth’s principal activity centres and has been on our target list for some time. Geographically, the suburb of Joondalup has been earmarked to become Perth’s second Central Business District and enjoys a captive and growing population, which is expected to drive above average retail sales growth over the next decade.
“The acquisition of Joondalup, together with the forthcoming redevelopment of Galleria and sale of four non-strategic assets in Western Australia, reflects our deliberate strategy to recycle and redeploy capital in order to right-size our investment and strengthen our asset portfolio in Western Australia.”
“Importantly, Vicinity has also secured the property and retail development management rights for Joondalup, which provides the opportunity to utilise our retail management platform to drive asset performance, whilst earning additional fee income.
“With Lakeside Joondalup already achieving annual retail sales of almost $800 million, and with Vicinity’s scalable retailer partnerships, we are confident there is growth and value to be unlocked. In this context, we look forward to curating an even stronger, flagship asset for Vicinity’s securityholders and on behalf of the asset’s co-owner, the Australian Prime Property Fund – Retail, managed by Lendlease,” said Huddle.
The Lakeside Joondalup site provides significant flexibility and scale for both short-term development and to create value in the long term via a mixed-use scheme
Lakeside Joondalup has a gross lettable area of 99,832m2 and is securely anchored by Myer, Kmart, Big W, Target, Coles, Woolworths, ALDI and HOYTS Cinemas. The attractive tenancy profile is supported by 16 mini-majors and 267 specialties and kiosks.
The centre is situated approximately 26km north of the Perth CBD on an expansive 23.8ha site, which accounts for a significant proportion of the Joondalup CBD.
The sale was competitively contested by a range of domestic groups given the centre’s outperformance, strategic growth corridor location, secure tenancy profile and mixed-use development potential.
CBRE’s Simon Rooney noted, “The acquisition marks the re-entry of REITs into Australia’s regional shopping centre investment market. The Joondalup transaction is the first such acquisition since Scentre Group’s $720 million acquisition of a 50% stake in Westfield Eastgardens in Sydney in mid-2018. It signals renewed interest from both REITs and unlisted wholesale funds in this market sector, which is expected to gather momentum throughout the second half of this year.”
The transaction follows the Dexus Wholesale Shopping Centre Fund’s disposal of its 50% stake in Adelaide’s Westfield Tea Tree Plaza to a Scentre Group/Barrenjoey unlisted fund for $308 million, and Fawkner Property’s acquisitions of Midland Gate in Western Australia ($465 million) and Cairns Central in Queensland for $390 million.
“The value proposition for regional shopping centres has become increasingly compelling for investors, given superior comparative returns on offer, rebased sustainable income profiles and robust performance fundamentals, as compared to most alternative commercial property asset classes,” Rooney said.
Lakeside Joondalup is the only regional shopping centre in Western Australia to feature direct railway line connectivity, in addition to a bus interchange, which helps underpin over 10 million customer visits annually.
As part of the transaction, Vicinity has also secured the property and retail development management rights for Lakeside Joondalup
The site provides significant flexibility and scale for both short-term development and to create value in the long term via a mixed-use scheme. This would reinforce Joondalup CBD as the premier commercial, retail, civic and educational precinct servicing Perth’s burgeoning northern suburbs.
It benefits from an expansive current trade area of 455,584 residents, which is growing by 1.3% per annum and is anticipated to reach 582,044 people by 2041.
As the dominant shopping destination to the south of Perth’s major designated growth area, Lakeside Joondalup is well positioned to be a major beneficiary of this forecast population growth.
The centre also benefits from the strong socio-economic profile of the main trade area, with household incomes of $117,528 some 7.2% above the Australian average.
The Vicinity Centres’ deal is the latest in Western Australia, which is continuing to gain traction as a key retail investment destination, with $1.4 billion in transactions finalised since the start of 2023.
Recent deals include Halls Head Central for $70 million to Centuria Capital, Midland Gate for $465 million to Fawkner Property/PAG, Rockingham Shopping Centre (50%) for $180 million to IP Generation, Dianella Plaza for $76.25 million to Greenpool Capital, Maddington Central for $107 million to Realside Property and Southlands Boulevard for $92.5 million to HMC Capital’s Daily Needs REIT.
Western Australia’s strong economic growth, higher levels of disposable income compared to the national average and relatively cheap cost of living have been positive drivers for retail demand, underpinning investor interest.
While Vicinity continues to actively reposition its asset portfolio via selective acquisitions, premium developments, and asset disposals, maintaining a strong balance sheet and credit ratings will remain a key priority. In this context, in addition to the $550 million of divestments announced to date, Vicinity is targeting an additional $250 million of asset sales in FY25.
