Fawkner brings Mackay mall into the fold
Busy fund manager Fawkner Property has swooped on the Mount Pleasant Centre in a $162.5 million deal, with the Mackay mall to form the centre-pin of its latest essential-services-focused trust.
The transaction, struck on net passing yield of 6.46 per cent and 6.55 per cent fully leased, is the latest in a string of deals by large investors looking for yields in the sub-regional mall market.
The 22,519sq m mall, managed by ASX-listed Vicinity Centres on behalf of Commonwealth Bank Group Super, ranks highly for its specialty tenant productivity and turnover per sq m by industry standards. It is anchored by a strongly trading Coles, Woolworths and Kmart, with a major tenant lease expiry of 8.4 years.
For Fawkner, Mount Pleasant will become a key plank in its Essential Services Trust No. 19, which offers its investors a monthly distribution yield of at least 6 per cent annually. Diversifying that income stream, the trust’s portfolio includes 17 roadside retail assets and five new childcare centres.
“With an outstanding tenancy mix of 89 per cent of gross income attributable to national and chain tenants, the centre falls within Fawkner’s strict acquisition mandate of acquiring non-discretionary-focused assets,” said property director Owen Lennie.
The Mackay acquisition is Fawkner’s fourth institutional-level deal this year alone, following the high-profile $195 million acquisition of The Square Mirrabooka from the real estate empire put together by billionaire Stan Perron, who died three years ago.
Its other big acquisitions include Traralgon Centre Plaza from Stockland Group and a portfolio of roadside retail assets from Waypoint REIT.
The Mackay transaction also points to how busy the sub-regional market has become in recent months as part of a broader reset of investment and prices across the retail sector, accelerated by the pandemic disruption.
In Melbourne, Lendlease’s APPF platform sold its CS Square to the DeLutis Family for $136.5 million in April, while in August Rich Lister Con Makris sold Hallett Cove Shopping Centre in Adelaide to Antunes Group for $71 million and MA Financial bought Stockland Bundaberg in north Queensland for $140 million.
“Mount Pleasant Centre was one of the strongest performing regionally located, sub-regional shopping centres to be offered to the market in Australia in many years,” said CBRE’s Simon Rooney, who brokered the deal with colleague James Douglas.
“With neighbourhood and freestanding retail assets selling at record pricing levels, investors are shifting their focus to high-quality sub-regional shopping centres, oriented towards non-discretionary spending.”
The total value of retail transactions jumped 82 per cent to $2 billion between the first and second quarters in 2021, on CBRE’s figures. In the sub-regional sector almost $1.3 billion in assets traded in the second quarter, almost double what was transacted in the corresponding period last year and 16 per cent above the 2019 second quarter.
