JY Group forks out $320m to buy into Vicinity’s vision of Bankstown

Bankstown Central is to be transformed into a major town centre in coming years.

Shopping centre owners have put residential developments across their mall empires at the forefront of the agenda for this cycle and ­investors are lining up to back their visions.

In one of the latest Sydney ­retail plays, JY Group has finalised its purchase of a 50 per cent interest in western suburbs landmark Bankstown Central for $320m. The breakthrough deal will have the company join Vicinity Centres in owning the high- performing property, which is set to be transformed into a mixed- use town centre in coming years.

The site has been fast-tracked under the NSW government’s Housing Development Authority process, in which it entered with Coronation Property, for a development that could include up to 1300 apartments.

But this will only be the first step in a longer-term redevelopment of the precinct that will transform it into a major town centre, served by a new metro station and facilities including a university campus.

The transaction, foreshadowed by The Australian newspaper, will lead to Challenger Life’s and Middle Eastern investment group the Abu Dhabi Investment Council’s exit from the property. It would also lock in JY Group as one of the larger investors in retail property over the past cycle.

Its latest purchase also deepens JY Group’s ties with Vicinity, as it co-owns other centres with the listed company.

Vicinity is making major strides as a mixed-use developer. As part of its overhaul of the Chatswood Chase complex on Sydney’s north shore, where it attracted luxury giant LVMH, it is also pursuing an apartment scheme on the fringe of the site.

An Artist’s impression of Vicinity Centres’ Bankstown project.

Vicinity Centres chief executive Peter Huddle flagged its interest in residential nationally.

“We’re heavily involved, particularly with the Victorian and NSW governments, and more recently … with NSW around providing high-density housing on our sites,” Mr Huddle said.

He called out both Bankstown Central, as an affordable project, and Chatswood Chase, which could become a luxury living hub.

“Both those assets have been accepted into that process,” Mr Huddle said.

The Bankstown sale was struck at a yield below 6 per cent and is a marker of the improving market for regional shopping centres. The transaction was brokered by CBRE’s Simon Rooney but he and the parties declined to comment.

The Bankstown move lifted JY Group into the top echelon of Australian shopping centre owners as it now has a portfolio spanning more than $3.5bn of assets.

The deal came after a Dexus fund last month took a 25 per cent interest in Westfield Chermside for $683m. The market is now readying for another contest for large shopping centre assets with Lendlease’s flagship retail property fund and South Korea’s NPS kicking off a process for Erna Fair next week, with expectations it will sell for more than $860m. CBRE and JLL have the listing.

Bankstown Central is one of the largest shopping centres in Sydney’s western suburbs. It spans 78,530sq m and is anchored by Myer and Big W, but the real attraction is its 11.4ha land parcel.

Other large shopping centre owners have also flagged the importance of transforming their portfolios into mixed-use centres. Scentre Group, owner of the Westfield empire, said this week it was assessing more sites for residential potential. It had also been working with governments in order to accelerate approvals and had won initial planning consents at Warringah Mall and Hornsby in Sydney, and Belconnen in Canberra. The company flagged that it would like to be the developer of these sites and would look to find capital partners to back its ambitions in coming years.