Villawood Properties executive director Tony Johnson has promised to breathe new life into “very average” greenfield retail developments, after securing a $300 million pipeline of east coast projects for his new venture, Sandhurst Retail.
The driving force behind many of Villawood’s residential estates, Mr Johnson said the retail component of the developments was often overlooked, resulting in poorly designed, under-performing shopping centres with high vacancies.
“I’ve watched what has been going on with these retail projects. A lot of them are very, very average,” he told The Australian Financial Review.
“[Through Sandhurst Retail] we’re going to breath new life into these centres and get away from the main street design, which has been shoved down our throats in Melbourne.
“It works in California, but not in Melbourne.”
Sandhurst Retail will acquire, develop and hold all its retail assets.
Funding will come from Villawood’s faithful investor base, referred to by Mr Johnson as “the family”.
However, Sandhurst Retail will operate as a separate business from Villawood Properties, with Villawood founder Rory Costelloe not directly involved in the business.
The specialist developer has already acquired two sites in Wollert and Sunbury in Melbourne’s north and Yamanto in Brisbane, which will be developed into 50,000 square metres of large-format retail, neighbourhood and sub-regional centres with a $200 million end value.
A further $100 million of projects are also in the pipeline, but the details remain confidential.
Mr Johnson said the focus would be on a return to mall-based development that incorporated better amenities and brought community facilities back into activity centres.
He said Sandhurst had held encouraging discussions with the Whittlesea Council, in Melbourne’s north-east, about bringing maternal healthcare centres back into retail centres.
“We want to bring new ideas into mall development, increase dwell times and create better performing centres,” Mr Johnson said.
He said Sandhurst Retail had already secured pre-commitments from the likes of Coles and Kmart and petrol groups to anchor new centres.
“A 15 per cent internal rate of return would be a great return for us. That is what we are targeting,” he said.
“We’re doing this completely out of equity initially and then will gear up when we begin construction.”
Sandhurst expects to turn soil on its first three projects over the next 24 months.
The developer has appointed Vivek Subramanian, formerly of Ranfurlie Asset Management and Novion Property Group, as director, to oversee the delivery of the pipeline.
” Our approach will deliver better performing assets that create places to visit beyond shopping – connecting social infrastructure, retail, dining and experience within communities, while adding real value to tenants, stakeholders and communities,” Mr Subramanian said.
“We have progressed quickly across all three current sites by securing the interest of national anchor tenants and moving into town planning.”
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