GPT Group to sell Wollongong Central to Haben as race for retail assets heats up
GPT Group’s shopping centre fund is selling Wollongong Central to Sydney-based property funds manager Haben for just over $400m with the deal confirming that the race for big retail centres is back on.
Just last week, Hong Kong’s Link REIT was revealed to be seeking to buy stakes in three Sydney CBD centres – The Queen Victoria Building, The Galeries and the Strand Arcade – from Singapore fund GIC for more than $500m.
The purchases show big centres are again trading in the wake of the coronavirus crisis and more transactions are being quietly struck.
The pricing shows that values have fallen steeply from their peaks ahead of the pandemic, but there is now a market for both premium CBD assets and regional centres that can be turned around.
For Haben, the buy is a dramatic step up the retail chain after it has bought a series of subregional centres from the likes of Stockland and Britain’s M & G Real Estate.
Colliers agent Lachlan MacGillivray, who is believed to be brokering the deal, declined to comment, as did Haben, but the fund manager is pitching the centre as a counter cyclical investment that also holds significant development upside.
The centre in Wollongong CBD has about 212 tenancies including a David Jones department store, Coles supermarket, Target discount department store, H&M, and more than 2100 car spaces.
It is owned by the unlisted GPT Wholesale Shopping Centre Fund and was held at a fair value of $390m at December 2020.
The centre has been a long running saga for GPT. The company’s shopping centre fund pulled the sale of Wollongong Central in mid-2018, prompting concerns among analysts about the limited appetite for large, yet not prime, regional and subregional assets. The fund also took a near 20 per cent writedown on the asset in 2015.
Haben told prospective investors it had secured Wollongong Central, which it dubbed a high conviction value add opportunity, and it would offer investors a new fund, the Haben Wollongong Trust.
Haben said the acquisition represents a purchase price well below replacement cost and well below peak valuation. There was a $490m peak valuation in June 2019 against just $402m now.
The complex comprises four buildings, with three holding significant development potential with schemes for more than 400 units. This could allow a break up of the site in future and one building has a podium in place for future development.
Haben pitched the potential for substantial value creation across separate buildings with opportunity to carve off repositioned discretionary based assets and boost returns on the traditional retail areas, which could be held long term.
Wollongong Central has 98 per cent occupancy, reflecting the demand by tenants to trade out of the landmark location, and sales growth has been growing year on year before Covid and is expected to continue once restrictions are lifted.