Macquarie Centre adds spice to the Dexus super regional mall offer

Sydney’s Macquarie Centre is a premium shopping destination with more than 360 specialty stores. Picture: John Appleyard

The super regional shopping centre market is preparing for one of its first major tests with a Dexus-managed fund to bring key stakes in Sydney’s Macquarie Centre and Pacific Fair on the Gold Coast to market.

The company is planning to bundle up the interests in the two landmark centres which its wholesale fund picked up when it merged with AMP Capital‘s diversified property fund to create a $15bn powerhouse.

Dexus pledged to bring liquidity to investors in the wholesale vehicle and intends to do so by selling its interests in both the $1.8bn Pacific Fair and the $1.6bn Macquarie Centre, with the mega-offer tipped to appeal to buyers seeking to stake a major claim in retail property.

The move would see Dexus put a 25 per cent stake in Macquarie Centre on the block alongside a 20 per cent stake it was preparing to offer in Pacific Fair.

CBRE‘s Simon Rooney and JLL’s Nick Willis and Sam Hatcher are handling the Dexus offer.

A sale could trigger one of the biggest shopping centre deals in the wake of the coronavirus crisis, and is a switch from an initial strategy that would have seen the properties handled separately.

The offer is likely to prompt fierce bidding from major investment shopping centre specialists including Scentre, Vicinity Centres and Lendlease. Mirvac and Stockland may also be interested, with all groups likely to team up with capital partners.

International buyers have already seen malls trading offshore, albeit at a discount to their pre-crisis levels, and interest may come from a new entrant looking to gain immediate scale in the Australian market.

Super regional centres may be in the doldrums due to current Covid-19 restrictions but the impact of the latest lockdowns is not expected to be as severe as 2020 when tenants received hefty rent relief.

The move would see Dexus put a 25 per cent stake in Macquarie Centre on the block alongside a 20 per cent stake it was preparing to offer in Pacific Fair. Picture: John Appleyard

The Gold Coast centre is already bouncing back from lockdowns and major listed landlords say that super regional centres are performing above expectations when they come back online. The sale of the interests could reflect the adjustments that both landlords and retailers have made to the “new normal” in which Covid-19 is expected to be managed.

The key to the offering is the potential to take on the management of two of the country‘s premiere malls, as the remaining interests in the properties are also in play.

The largest stakes are held in the AMP Capital Retail Trust, in which backers Middle Eastern fund ADIA and Canadian fund Canada Pension Plan Investment Board are assessing their options. They are being advised by Lachlan MacGillivray of Colliers International.

The ACRT owns the remaining 80 per cent in Pacific Fair and a half stake in the Macquarie Centre. The remaining quarter interest in the Sydney centre is held by AMP Capital’s $3.6bn unlisted shopping malls fund. Dexus and AMP declined to comment.

Depending on how the sale process plays out the ACRT investors may support a new manager coming in to run the centres, which would make the stakes offered by Dexus enticing, as owning them would leave the buyer in the box seat to manage two landmark properties.

The outcome could have deeper implications for the AMP Capital shopping centre business, as the two centres are trophies, and the prospect of losing them could even spur a move by the manager to keep them.

The redeveloped Macquarie Centre at North Ryde is a premium shopping destination with more than 360 specialty stores over four levels, anchored by Myer and David Jones.

A buyer could receive some exposure to its mixed-use potential in future. There are plans for 1000 new apartments in four tower blocks and the centre could also be further overhauled.

A $670m refurbishment of Pacific Fair completed in 2016 has already regenerated the area. It sits in the heart of the Gold Coast on a 16.6ha site, adjacent to The Star Casino and the Broadbeach retail, conference and accommodation precinct.