QIC Sells Castle Mall for $105m

QIC have ended their long term strategic investment in Castle Mall following the recent sale of Centre Mall to the Hills Shire Council for $105m.

The neighbourhood shopping centre, which has always been dwarfed by the dominant Castle Towers, is anchored by IGA Express, TK Maxx and Castle Hill Medical Centre, comprised 8,916 sqm of floor space on a 7,866 sqm site.  

The property was located 200 metres from a new metro station in Castle Hill – about 30 kilometres north-west of the Sydney CBD. 

The property was offered with a fully leased net operating income of $4.3 million p.a., and a 4 year WALE with flexibility via demolition clauses. The sale represents a fully leased yield of 4.1%.

Stonebridge Property Group and McVay Real Estate acted for QIC in the disposal process.

QIC once considered whether connecting the two Centres was feasible but abandoned the idea years ago in favour of acquiring further land to the north west of the Centre.

Michael O’Brien, Managing Director of QIC Real Estate, said the divestment of Castle Mall, located opposite Castle Towers, with both assets held jointly by the QIC Property Fund and QIC Town Centre Fund, was in line with the client endorsed strategy for the funds.  

“As Castle Mall does not form part of this masterplan, it was surplus to our needs.” 

“The property was highly sought after and resulted in a very competitive bidding response from about a dozen buyers, ranging from institutions, private investors, developers and syndicators,” O’Brien said. 

Hills Shire Council says the site will remain a shopping centre for “the foreseeable future”.

Hills Shire Council General Manager Michael Edgar said: “The purchase of Castle Mall will not only help to boost Council’s annual income, but it also means as a landowner, we can carefully plan a future for the whole site, from Castle Mall down to the University.

“This puts Council and the community in a great position in the future, even though it will remain a community shopping centre for the foreseeable future,” Mr Edgar said.

Mr Edgar said Hills Shire Council’s strategic investment portfolio provides a stream of revenue outside of rates and fees that fund vital community services such as Council’s Capital Works Program that delivers assets like new parks and playgrounds.

“Our financial management strategies have long included a strategic property portfolio that works to bridge funding gaps, ensuring Council has the resources to provide essential infrastructure and services,” Mr Edgar said.

QIC to Focus on Castle Towers

QIC continues to be focused on activating its retail-anchored mixed-use town centre masterplan for Castle Towers.  

QIC recently submitted a DA for refurbishment works to Zone 3 of the Centre which incorporates and old KMart space and Upper level Food Court. QIC will spend $142m to provide better vertical connections, and to repurpose 2 existing mini-major tenancies, 47 specialty tenancies and 12 food and beverage tenancies across multiple levels. On completion the project will include 10 mini-major tenancies and 39 specialty tenancies (including kiosks). The total net gain in floorspace is understood to be 3,508m2 of GLA

Castle Towers currently provides some 120,000m2 of GLA and records total annual retail sales of around $800 million. On this basis, Castle Towers is one of the largest and highest trading shopping centres in Australia. In particular, specialty shops at the centre generate high sales levels when compared against industry benchmarks, with an average trading level across the mini-major and retail specialty floorspace understood to be in the order of $10,000 per m2.

Castle Towers Shopping Centre has an existing approval for an expansion of the centre (Development Consent 864/2015). This approval has been modified on a number of occasions and supports a major renewal and expansion of the centre to cater for the retail, services, leisure and entertainment needs of the existing and future community of The Hills Shire.

However, with the evolution of the retail sector in response to the growth of online shopping and other structural changes, QIC have identified a need to adapt Castle Towers Shopping Centre in order for the centre to remain relevant in the changing retail landscape.

A new vision for Zone 4, (seen below) is yet to be finalised.