Lendlease fund tests shopping mall market with $400m portfolio

The Lendlease Sub-Regional Retail Fund is selling a portfolio of assets including Settlement City in Port Macquarie.

Lendlease is testing the appetite for shopping centres, offering up a $400m portfolio as the market resets with investors still keen on convenience-based assets even as larger malls are harder to get away.

The Lendlease Sub-Regional Retail Fund is offering up three subregional centres across the country, hoping to sell them even as the value of larger assets comes under pressure.

JLL’s Nick Willis and Sam Hatcher and CBRE’s Simon Rooney and James Douglas are handling the sales.
The assets on offer from the fund are Sydney’s Menai Marketplace, Port Macquarie’s Settlement City on the NSW coast, and Southlands Boulevarde in WA.

They are expected to be highly sought after by the investor community, with sales performance across the portfolio among some of the most productive in the country. Menai Marketplace and Settlement City were ranked fourth and twelfth by annual sales in the country.

Menai Marketplace is a dominant centre within a densely populated and highly affluent trade area in Sydney’s southwestern suburbs.

Settlement City is the largest centre in the Greater Port Macquarie region and features the only Woolworths and Big W within its trade area. Retail expenditure in the trade area is forecast to grow at a rate of circa 3.5 per cent per annum, underpinned by local trade and tourism, with approximately 3.1 million people shopping there each year.

Also on offer is Southlands Boulevarde in Perth’s southern suburbs. The asset has a strong local convenience offer and is the largest centre in its trade area of over 84,000 people. It will become one of only 10 triple supermarket-anchored centres with no discount department stores nationally when Aldi opens in early 2023.

“We have seen a significant shift in investor demand towards the convenience retail sector, however it is a highly fragmented market. Portfolios of this quality and scale are rarely offered and this will be the largest offering since 2018, which will provide an investor immediate scale to the sector,” Mr Willis said.

Mr Hatcher said the assets provide a number of value-add opportunities via rental growth and mixed-used development potential.

CBRE’s Mr Rooney said each centre had a dominant position in its retail hierarchy, offering secure cashflows and highly productive major and specialty tenant profiles with further opportunities within each asset to enhance returns via rental growth and strategic tenant remixing.