Stockland lands Morgan Stanley as partner for regional shopping centre rollout

Stockland opened Sienna Wood Town Centre – after investing about $60m – last month.

Listed property giant Stockland has landed heavyweight investment manager Morgan Stanley Real Estate Investing as a capital partner for a series of newly opened and planned neighbourhood shopping centres in a major alliance between the pair.

The US investment giant joins Stockland’s roster of capital backers that the group has introduced to aid the rollout of new developments, and the tie-up could be worth $1bn as the centres are built out.

The developer is capitalising on the heat in the retail sector that had also triggered Woolworths to trade a $500m portfolio, and Charter Hall to snap up neighbourhood centres for its convenience retail fund.

The impending deal also signals the attraction of retail property as Morgan Stanley’s funds had previously targeted office and industrial deals.

Stockland last year kicked off a search for a partner to back new malls in its housing estate business in a process run by real estate agency JLL’s Luke Prokuda, Mike Pyke, Sam Hatcher and Nick Willis. They and the parties declined to comment, while Stockland said the transaction “remains subject to documentation”.

It sought a capital backer to support a vehicle to develop about $1.2bn in malls and the US bank signed on for two initial assets, with more in the pipeline. Morgan Stanley will take a stake of about 70 per cent in two malls – one in Queensland and the other in Western Australia.

Stockland chief executive Tarun Gupta. Picture: Jane Dempster

Investors are chasing neighbourhood shopping centres as they are tipped to hold up in the tougher conditions that are emerging amid low consumer confidence.

Stockland chief executive Tarun Gupta had led the way in the bringing capital partners into much of the company’s commercial investment operations, as well as attracting them to its residential business.

The JLL process offered up a trio of centres – one in Sydney’s Gables estate to come – and the prospect of gaining access to about $320m of planned centres and $600m of more speculative proposals. The two seed assets are at Ripley near Ipswich in Queensland, and at Hilbert in WA.

The developer opened Stockland Sienna Wood Town Centre – after investing about $60m – last month. It serves the Sienna Wood estate, which will grow to have almost 12,000 residents.

The 7500sq m town centre has a full-line Woolworths supermarket, about 15 specialty shops including dining, a medical centre, and a Nido Early School childcare centre.

Stockland also opened Stockland Providence Town Centre in South Ripley last month. The first stage of the $65m centre spans more than 8000sq m and has almost 30 retailers and services, including a full‑line Coles supermarket, a 140‑place Green Leaves Early Learning childcare centre and Priceline, along with health services and dining and takeaway outlets.

Stockland last year struck deals worth about $800m in total that will result in US private equity house KKR and British funds giant M&G Real Estate joining it as partners in growing its logistics operations.

Stockland also has ties with Japanese group Mitsubishi Estate Asia to invest in Stockland-owned housing estates. The listed company separately has a $1bn capital partnership with US giant Invesco Real Estate in the land-lease sector.