Queensland government-backed funds manager QIC goes shopping for retail assets

QIC is betting on returns from convenience retail centres like Nerang Mall

Queensland government-backed funds manager QIC wants to forge deeper into the hot convenience retail sector and could treble its holdings in the area to about $1.5bn.

QIC has launched an equity raising in order to treble the portfolio of the refreshed QIC Everyday Retail Fund over the next three years. It has already received backing from the Clean Energy Finance Corporation and Prime Super alongside existing investors.

Institutional investors such as Charter Hall and David Di Pilla’s HMC Capital have pushed deeper into the area, capitalising on shifts in shopping habits which have made more frequent, smaller visits a key part of supermarket and food retailing.

They are making big inroads into one of the last areas of property where private operators still have a major presence, creating an opportunity for big investors to come in and amalgamate in the sector.

The open-ended QIC fund will selectively target community centres anchored by daily-needs retailers with embedded opportunities where it can unlock value for investors.

QIC’s $526m seed portfolio includes six subregional and convenience centres across southeast Queensland and Sydney’s northern beaches.

QIC Real Estate managing director Deborah Coakley said a recent recapitalisation positioned the fund for its next phase of growth.

An aerial view of the Big Top Shopping Centre on the Sunshine Coast.

“Low vacancy rates and the lack of new development is leading to some outstanding opportunities for returns in stabilised retail assets, particularly in the everyday retail space,” Ms Coakley said.

“This fund has consistently outperformed benchmarks through economic cycles, and sharpening its focus on everyday retail allows us to leverage the current market dynamic and tap into the resilient income profile these assets enjoy – driven by stable tenant and customer demand.”

The backing of the CEFC and Prime Super has allowed QIC to recapitalise the fund and put it in a strong position to re-enter the market and snap up centres on and off-market.

The fund will sell off a number of industrial assets over the coming months, and proceeds will be reinvested into new convenience retail opportunities which fit with the fund’s strategy.

QIC Real Estate core plus strategies fund manager Charles Occhino said compelling structural supply-demand dynamics would result in supermarket-anchored centres maintaining their role as a defensive ballast in retail portfolios.

“For the last 25 years, everyday retail centres have achieved both the highest productivity growth and speciality rent growth per square metre across all shopping centre subclasses,” Mr Occhino said.

The fund is already targeting net zero carbon emissions, scopes 1 and 2, by 2028, as on-site solar generation now accounts for approximately 50 per cent of common area energy use. More decarbonisation efforts are planned.

The seed portfolio includes Big Top Shopping Centre, Kippa-Ring Shopping Centre, The Village Upper Mount Gravatt, Forest Lake Shopping Centre and Nerang Mall, all of which are in Queensland. It also includes Pittwater Place in Sydney.

QIC is separately selling the famed Hyperdome complex to the south of Brisbane in rapidly growing Loganholme to the listed MA Financial in a near-$700m exit.