QIC gear up for a new LFR Asset

17 September 2021

Six months after disposing of two large format retail assets from its Funds’, QIC has now spent $135m to acquire the Craigieburn Junction, a newer large format retail centre in a high growth area in Melbourne’s north.

Craigieburn Junction was developed by Oreana Property Group and sold to PGIM under a land acquisition and fund through arrangement shortly after work commenced on site back in 2017.

QIC will hold Craigieburn Junction in their Active Retail Property Fund.

QIC Fund manager, Charles Occhino said “The acquisition of this defensive retail asset showcases QIC’s conviction in the core plus real estate asset class, and is a fitting addition to QIC’s established, high-quality $1.1b core plus portfolio, consisting of a diversified exposure in retail, industrial and office assets.”

The Centre sits on 6.05ha of land at 420-440 Craigieburn Road and comprises 25,086sqm of NLA. Key tenants in the Centre include some of the nation’s leading large format retailers, such as Nick Scali, Freedom, Snooze, Super Cheap Auto, 40 Winks, Bed Shed, Pet Barn, Autobarn and Fernwood Fitness.

The centre also has a high proportion of lifestyle and service tenants, including a Caltex Service Station, fast food outlets, a supermarket, a childcare centre, a major medical centre and various food and beverage outlets.

The high-exposure location of the asset (with some 26,000 cars passing each day) will provide the Centre with further value-add opportunities over the medium term.

The Centre was offered for sale with a 7.29 year WALE and minimal vacancy.

QIC’s acquisition price reflects a 5.4% passing yield and a rate per NLA of $5,870/sqm.

QIC recently sold two large format retail Centres; Watergardens Homeplace in Taylors Lakes, Victoria, for $97m, reflecting a 5.0% yield ($3,880/sqm of NLA), and the Home+Life Robina centre on Queensland’s Gold Coast for $66m reflecting a 6.2% yield ($4,465/sqm of NLA). Both assets formed part of the QIC’s core retail funds which were divesting its assets as per their investor endorsed strategies.

These assets were either or required to be sold on market as per the divestment strategy or otherwise just not suitable for the Active Fund at those prices. QIC did not wish to comment either way.

The property was marketed by Stonebridge’s Justin Dowers and Philip Gartland in conjunction with JLL’s Nick Willis, Sam Hatcher and Stuart Taylor.