Centennial expands reach into the retail sector securing equity in Parkstone Funds Management – aims to build $1bn niche retail portfolio

12 April 2024

Last month’s sale of Bundaberg’s largest shopping centre – Hinkler Central – for $107m through a partnership between Centennial and Parkstone Funds Management has cleared a path for Centennial’s expansion into the country’s top regional and large format retail sectors.

    As part of the Hinkler Central transaction, acquired from the Queensland government’s investment arm QIC, which settled in late March, Centennial has also acquired an equity interest in Parkstone with the right to increase over time, plus board representation.

    Parkstone currently has around $240m in funds under management across 6 neighbourhood supermarket anchored centres in South Australia and regional New South Wales, while Centennial’s portfolio of funds under management now nudging $2.1bn, comprises 85 assets spread across urban/last mile industrial & logistics, commercial and boutique residential property.

    The acquisition of Hinkler Central comes at a time when the sector is beginning to see a resurgence in the demand for dominant centres offering healthy yields for investors. The centre’s gross lettable area (GLA) and moving annual turnover (MAT) metrics position it among the top 10 centres nationally in its class.

    Centennial Executive Director, Paul Ford said “We are delighted to have participated in the acquisition of such a high-quality investment whilst also forming a strategic partnership with Parkstone. This is the first of what we anticipate will be a broader partnership that will position us as a major player at scale in this space.”

    The tactical move marks a major milestone for Parkstone Funds Management and Centennial in further strengthening their presence in the retail property sector. It has allowed Parkstone to tap into Centennial’s extensive funds management experience and well-established investment platform, while Centennial has leveraged Parkstone’s deep expertise in the retail property sector.

    Hinkler Central Shopping Centre is Bundaberg’s largest and highest performing retail precinct, sitting at 99 per cent occupancy and anchored by Woolworths, Kmart and Coles and includes a further 65 retail and dining spaces. Hinkler Central features more than 1,000 mostly undercover parking bays with direct travelator access, and its specialty tenant mix is orientated to ‘consumed onsite’ products and services such as banking, medical, food and beauty, which increases dwell times.

    The centre is well-located in Queensland’s second-fastest growing city with 7.1 per cent economic growth and nominated as number one for region-to-region relocations.

    The centre’s metrics position Hinkler Central among the top 10 nationally in its class.

    Parkstone Funds Management Managing Director, Tim Wilkin, said the acquisition, executed after a thorough due diligence process, reflected Parkstone’s commitment to identifying and capitalising on compelling retail investment opportunities.

    “The acquisition of the Hinkler Shopping Centre significantly bolsters our group’s exposure to sub-regional centres while further enhancing our portfolio’s overall quality and diversification,” Mr. Wilkin said.

    “We consider it an excellent yield and growth play because of the high barriers to entry in this market, being acquired approximately 30 per cent below replacement cost. There also exists further opportunity to enhance the Centre in terms of development along with the ability to access positive rental reversion.

    “The resilience and attractiveness of sub-regional shopping centres adds a further level of optimism to our regional investment strategy. Centres of this quality serve as important community hubs and have demonstrated proven resilience through some challenging times in recent years. We look forward to delivering continued growth for this asset.”

    The transaction was handled by Sam Hatcher and Jacob Swan of JLL.