Queensland mall portfolio sale pulled as rates and share market volatility bite
The tough economic environment for commercial property has claimed yet another deal with Queensland businessman Don O’Rorke’s Consolidated Properties Group and funds house CVS Lane Capital Partners pulling a $500m mall portfolio off the market.
The sale was headed towards a shootout between big landlords, as the neighbourhood centres which were on offer are among the hottest assets going due to their steady income even in the face of the coronavirus crisis.
Shoppers are also returning to malls, providing an uplift for specialty stores, and the centres are well located in growth areas in Queensland which are being chased by big companies.
But hopes of a sale were dashed by rising rates and the rocky share market, which makes it tough for listed groups to buy property.
“Changing market dynamics, particularly in recent weeks, have influenced the decision to cease the sales campaign,” the pair said in a statement.
“The assets continue to perform strongly and will be retained, with expansion plans for three of the assets to continue in keeping with their investment strategies.”
Interest was expressed in the portfolio from listed players including SCA Property Group and HomeCo, as well as private and international players.
The vendors decided to keep the portfolio due to the effect of higher inflation on rates and markets.
Neighbourhood shopping centres have been the most resilient retail asset class during the pandemic, as local and convenience-based malls benefited from people shopping locally.
JLL and CBRE were marketing the portfolio of five Queensland centres and said during the campaign that investor interest and demand for neighbourhood retail had once again heightened.
CVS Lane Capital Partners and Consolidated Properties Group said that there was strong interest from more than 50 parties in acquiring the assets, on an individual or portfolio basis.
CVS Lane chief executive Lee Centra and CPG managing director Mr O’Rorke said that they were pleased with the level of local and international interest received.
They had, however, determined that “in light of recent market volatility, retaining these premium non-discretionary retail assets, in a high-growth region, is in the best interests of all stakeholders”.
The sales process was conducted by CBRE and JLL. The five shopping centres are located at Karalee, Palm Beach, Wilsonton, Springwood and Keperra.
According to JLL data, last year 61 neighbourhood centres transacted nationally with a record deal volume of $2.45bn, 22 per cent above the previous 2019 high
This article was first published on www.theaustralian.com.au.
