Lendlease is tapping into rising investment appetite for shopping malls, making moves to divest its $350 million half-stake in Harbour Town on the Gold Coast in order to fund redemptions for its own investors.
The Harbour Town stake is held in the Lendlease-run $4 billion APPF Retail fund, which has been looking to divest some of its assets to fund about $1 billion in redemptions.
Those plans were thrown into disarray last year when the pandemic struck, prompting Lendlease, as the fund manager for APPF Retail, to pull plans for a series of divestments, including Melbourne malls Craigieburn Central and CS Square, and a 50 per cent stake in Brisbane’s Westfield Carindale.
But Lendlease is cranking up the APPF Retail divestment program – CBRE and McVay Real Estate are appointed to Harbour Town – as fund managers and institutional investors make their way back to retail real estate, on the hunt for yield and opportunity after last year’s shake-out in values. On some views, the big run in industrial transactions, buoyed by the e-commerce boom, is making the yields from retail assets look appealing once again.
Lendlease’s investment platform will have high hopes for a strong return on its half stake in Harbour Town, which is among the top-three outlet-based malls in the country. There are about 240 specialty tenancies across the 55,225sq m centre. The APPF Retail stake increased to 50 per cent after it took out a 25 per cent investment held by the Future Fund three years ago in a $180 million deal. Lewis Land holds the other half stake.
The drumbeat of mall deals has resumed. In April, APPF Retail sold CS Square shopping centre on Melbourne’s north-western edge to the De Lutis family for $136.5 million on a passing yield of about 6.5 per cent. In the same month, Elanor Investors Group bought a Toowoomba mall for $145 million deal on a 7.9 per cent yield from Blackstone, which had acquired it five years earlier for around $188 million.
Last week, Perth’s Mirrabooka mall, part of the real estate empire put together by billionaire Stan Perron, sold to syndicator Fawkner Property for $195 million on a passing yield of 6.97 per cent.
Also this month, in the biggest single retail property deal since the pandemic began, Sydney billionaire Paul Lederer sold a $300 million portfolio of neighbourhood malls in NSW to growing fund manager IP Generation on a yield of about 6 per cent.
The APPF Retail portfolio includes stakes in Lakeside Joondalup, one of the biggest malls in Western Australia, Sunshine Plaza in Maroochydore on the Sunshine Coast, and Macarthur Square in western Sydney.
There are even bigger mall deals brewing. including the potential for a full sell-down of one of the Gold Coast’s best-known shopping centres, the $1.8 billion Pacific Fair.