Half-stake up for grabs at Adelaide’s Westfield Marion
Lendlease’s flagship Australian shopping centre fund is dealing with hefty redemption requests by offering up a half-stake in the $1.5 billion Westfield Marion shopping centre in Adelaide.
The landmark centre, one of the country’s largest, is likely to set a key benchmark as retail values shift in the face of the e-commerce threat and tough climate for many retailers.
The sale, being handled by JLL and Colliers International, will help meet redemption requests in the Australian Prime Property Fund Retail that amount to around $2 billion.
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The quantum of these requests may prompt further asset sales or partnership transactions in coming years as premium malls are still sought after by investors.
Lendlease unit may also seek new strategic backers to inject funds into the vehicle that controls a $5.7 billion portfolio of some of the country’s best malls.
“The sale of the interest in Westfield Marion is in line with the fund’s capital management strategy and provides liquidity options to satisfy the redemption requests of some investors,” a Lendlease spokesman says.
Fortress assets of the calibre of Westfield Marion are very highly sought after in the international marketplace
Asset consultants say global investors are reluctant to back retail funds globally, partly as listed groups trade at steep discounts in the US and Britain.
Retailers are also battling sluggish consumer spending and the collapse of the housing boom as well as the structural shift due to the rise of e-commerce.
Shopping centre groups are countering by tilting their assets towards lifestyle uses and mixed-use projects to combat slowing retail performance and Marion is well-placed to exploit these opportunities.
Marion is co-owned by the owner of the local Westfield empire, the Scentre Group, that also manages the centre, but it is likely to pass on it pre-emptive rights to take full control of the asset.
Instead, a global campaign will be conducted to find a group to buy half the asset, which is been pitched as having a dominant position and comes with substantial redevelopment opportunities.
The sale comes as some $11 billion worth of shopping centres are on the market, according to Citi Research. Vicinity Centres and Stockland are also selling assets.
Super-regional shopping centres are the pinnacle of shopping centre investments, offering the highest risk-adjusted returns, and are highly resilient
Simon Rooney, of JLL, and Lachlan MacGillivray, of Colliers International, are running the campaign.
Rooney said there has been a shortage of large high-quality retail assets offered to the market, adding that Marion will appeal to core investors, both domestically and internationally, because it is one of the top 20 centres in the country for sales productivity.
The property’s performance will be underpinned by the dominant nature of the centre, given it is the 13th largest centre in Australia by moving annual turnover.
“Fortress assets of the calibre of Westfield Marion are very highly sought after in the international marketplace,” Rooney says.
MacGillivray says super-regional shopping centres are the pinnacle of shopping centre investments, offering the highest risk-adjusted returns, and are highly resilient.
Yields on the most recent regional shopping centre transactions were struck at or below 4.25%, showing demand exists for core assets from domestic and offshore investors.
These transactions saw stakes in Westfield Eastgardens, Pacific Werribee, Indooroopilly and Highpoint change hands.
Marion is anchored by David Jones and Myer, as well as Harris Scarfe, Big W, Kmart and Target, Coles, Woolworths and Aldi supermarkets, Dan Murphy’s, Bunnings, an Event Cinema complex and 310 specialty stores.
On a 22.9ha site, it could also suit mixed-use development.
This article originally appeared on www.theaustralian.com.au/property.