HMC Capital makes $119m play for Brisbane retail centre

An HMC Capital-managed fund has bought Market Central Lutwyche in Brisbane.

Rapidly expanding funds house HMC Capital has again bolstered its empire, swooping on Market Central in the northern Brisbane suburb of Lutwyche for about $119m.

The centre was offloaded by the listed Abacus Group and superannuation funds-backed manager ISPT, which each held half interests and had redeveloped the asset. Abacus disclosed it had sold its interest, with the half interest that ISPT held in the unlisted IPART fund also going to HMC in the same sale.

The property, on the corner of Lutwyche Road and Chalk Street, is a neighbourhood “super convenience” shopping centre that is likely to be put into the HomeCo Daily Needs REIT. It is anchored by three supermarkets – Coles, Woolworths and Aldi – and backed by 43 specialty stores.

HMC Capital was attracted to the centre by its position in the Queensland capital’s affluent suburbs, its diverse income, and the ability to boost returns in future.

The 21,834sq m centre already has a diverse range of retailers, dining and essential services under one roof and is only 5km north of the CBD. The area has also become a health hub dominated by government-funded tenants that require flexibility and convenience outside of the city.

The vendors completed a $77m ­redevelopment in 2019 that included a refurbished Coles, the introduction of the full-line Woolworths supermarket and relocated Aldi supermarket, a medical precinct and health hub predominantly secured by government-funded tenants.

Abacus had held its stake at $60m on a capitalisation rate of 6.5 per cent, and HMC will now be able to overhaul the 2.15ha parcel on which it sits. It will probably look to boost the asset by further improving the centre and planning its future. The site is a longer-term land bank, with mixed-use zoning and a height limit of up to 12 storeys.

Abacus and the private Zenonos Group had bought what was then the slightly smaller neighbourhood shopping centre from Federation Centres for $65m in 2015. Abacus held a 75 per cent share, and the private group later exited. ISPT in 2018 unveiled a larger retail tie-up with Abacus, in which it took a 50 per cent share alongside Abacus.

The latest sale was handled by JLL’s Nick Willis and Sam Hatcher and Stonebridge’s Carl Molony, Philip Gartland and Justin Dowers. They declined to comment on the sale.

But when the centre went on the market, Mr Willis noted that this year had seen a decline in formal on-market opportunities, with Market Central Lutwyche the first institutional-grade centre offered in metropolitan Brisbane this year.

Mr Hatcher said Brisbane core non-discretionary-based centres were extremely tightly held, with most owners being privates and long-term owners. Over the last five years, only three neighbourhood centres above $100m sold in Brisbane.

Mr Molony said at the time that demand from capital for prime metropolitan assets was extremely strong, “particularly in a market where the supply of assets publicly available for sale has reached a new low”.

The supermarket anchors generate more than $121m in sales and are supported by two mini-majors, 29 specialities, 10 kiosks and 14 office tenancies. The centre has 760 undercover car spaces, providing significant income.