Stockland goes shopping for partners in $1.2b malls fund
Diversified developer Stockland is looking to turbocharge its development of small neighbourhood malls across its housing estates, seeking capital partners to back a retail property fund with a potential end value of $1.2 billion.
Stockland is seeking one or more capital partners to take up to a 70.1 per cent stake in what it is calling the Stockland Retail Trust, according to an investment teaser obtained by The Australian Financial Review.
The new fund will provide “institutional investors with immediate scale in the tightly held metropolitan neighbourhood shopping centre retail sub-sector”, the document said.
Led by Tarun Gupta, the capital raising is the latest initiative by Stockland as it pursues a strategy of bringing on board major global funds and capital sources to share the load, co-investing in a range of real estate projects, from housing estates to logistics assets.
Shopping centres are the latest addition to that list, with the proposed fund or partnership to be seeded with a $250 million portfolio of three neighbourhood shopping centres in New South Wales, Queensland and Western Australia. All of them are under construction, anchored by a Coles or Woolworths and due to completed between November this year and May next year.
The briefing document makes clear there is a much bigger pipeline of projects the proposed fund could include, with another $320 million in centres under planning and $600 million in future opportunities, amounting to 13 neighbourhood malls in total.
“The strategy of the partnership is to undertake further retail investment including potential opportunities to acquire Stockland’s development pipeline or market acquisitions by leveraging Stockland’s deep network and relationships with landowners and developer partners,” the investment document said. Stockland has brought in JLL’s Luke Prokuda, its co-head of equity advisory and Sam Hatcher, JLL’s retail investment head, to steer the process alongside its own executives.
The initial group of centres earmarked for the new fund or partnership sit within Stockland’s greenfield housing estates, with a focus on non-discretionary shopping. The three seed assets under development already are Sydney’s Hills Shire, at Ripley near Ipswich in Queensland, and at Hilbert in Western Australia.
The briefing document notes the relative scarcity of opportunity of sizeable investment opportunities in neighbourhood centres with only six such portfolios formally offered to the market over $100 million in the past 10 years.
The retail offering builds on a run of successes in bringing investment partners onto the platform since Gupta, the former chief financial office at Lendlease, took charge at Stockland four years ago.
In February this year, it announced two new capital partners to co-invest in logistics assets, partnering with London-based M&G Real Estate to form a 50-50 Stockland M&G Asia Partnership Trust. It has also partnered with the investment arm of private equity firm KKR to create the Stockland Logistics Partnership Trust, a 70 per cent KKR, 30 per cent Stockland core-plus partnership seeded with three assets worth $388 million.
It has also expanded its Stockland Land Lease Partnership, which it created with US-based Invesco Real Estate last year, adding four more communities to the fund last year.
