Bundaberg mall to sell on 8pc return as investors look to outrun RBA
Fund managers Centennial and Parkstone have joined the big push into higher yielding regional malls on offer at discounted prices after entering due diligence to purchase Hinkler Central in Bundaberg for about $107 million from the Queensland Investment Corporation.
The near 21,000 sq m mall at 16 Maryborough Street is anchored by Coles, Woolworths and Kmart and is the dominant centre in the Queensland coastal town of more than 70,000 people.
A purchase price of $107 million would equate to a yield of about 7.75 per cent, providing the basis for an attractive distribution for Centennial and Parkstone’s investors, after interest rates hit a 12-year high of 4.35 per cent on Melbourne Cup Day.
It is also slightly less than the $110 million state-owned QIC paid Mirvac for Hinkler Central in 2015, when it acquired the mall on a yield of 6.5 to 7 per cent.
It is understood Sam Hatcher and Jacob Swan from JLL negotiated the deal on behalf of QIC.
A spokesperson for Sydney-based Centennial and its Adelaide-based partner, Parkstone Funds Management, said a capital raise for the Hinkler Central Trust would start this week.
“Given that the parties are currently going through due diligence with the vendor of Hinkler Central, neither can comment further until the contract is unconditional, which is expected by the end of the year.”
A spokesperson for QIC confirmed the investment company was engaged in a process to potentially divest Hinkler Central, which is held by the QIC Active Retail Property Fund.
“As an active real estate manager, QIC is constantly strategically reassessing the holdings of our funds to capture optimal growth and return outcomes for our clients, and this proposed divestment is in line with the client-endorsed strategy for QARP.”
The pending acquisition adds to a strong flow of institutional and private capital into regional malls, which typically offer higher returns than those in the capital cities.
Deals struck over the past few months include the Smithfield Shopping Centre near Cairns in far north Queensland, which a Lendlease fund sold to Alceon and CPRAM Investments for $140 million property on a yield of about 7.5 per cent.
Lendlease also divested another regional mall, Settlement City, the largest shopping centre in the Port Macquarie area. This was picked up by Melbourne fund manager Fawkner Property for $107 million on a 7.5 per cent yield.
Another big regional mall expected to change hands is Cairns Central – another Lendlease-managed asset – with investment house Haben mooted as the buyer for close to $400 million.
At the smaller end of town, a $60 million collection of three regional Victorian retail assets –the Woolworths-anchored Pakington Strand neighbourhood centre in Geelong, a Coles supermarket in the Warrnambool CBD and the Officeworks-anchored Shepparton Retail Hub – have hit the market through Colliers and Stonebridge.
“Regional retail investment sales activity across Victoria has been scarce in supply yet highly sought after in our top 10 regional cities,” said Colliers agent Tim McIntosh.
Mr McIntosh said Victoria’s 50 per cent stamp duty concession for commercial property in regional areas, continued population growth, and the strong trading performance of tenants had made these assets attractive to local and interstate investors.
