Sentinel has acquired a 100% interest in Queensland’s Caneland Central Shopping Centre, with management rights, for $280 million.
The sale represents the only transaction for a 100% stake in a Regional Shopping Centre in 2022.
JLL’s Retail Investments Team, Nick Willis and Sam Hatcher exclusively sold the 100% interest in Caneland Central Shopping Centre in Mackay, Queensland on behalf of Lendlease’s APPF Retail Fund via an international Expressions-Of-Interest campaign. The Caneland Central purchase price resulted in a passing yield of 7.7%.
APPF Retail has owned and managed Caneland Central since 2001. It attracted a high level of interest from prospective buyers as it is the premier shopping and lifestyle destination in the Mackay region for the local community and tourists.
Anne MacSporran, Fund Manager, APPF Retail said “The centre has been a strong performer for APPF Retail due to its mix of retail, lifestyle and dining and core position at the heart of Mackay’s local community.
“APPF Retail is continuing to evolve in line with changing consumer demands and is positioning its assets to offer more mixed-use opportunities to cater to future lifestyle, technology and shopping needs.”
“Despite recent market volatility, the outlook for Australian retail remains positive, with sales remaining robust post the pandemic.
Mr Hatcher said, “Opportunities to acquire a 100% stake in major Regional Shopping Centres seldom come to market. Caneland Central is the only 100% interest Regional Shopping Centre to have sold in 2022, and in the past 10 years, only three of the 38 Regional Shopping Centre assets to have sold in Australia have been for a 100% interest with management rights.”
Mr Willis said, “This transaction is a positive endorsement for Australia’s retail investment market. It represents the second shopping centre trade above $250m in 2022, (excluding large format retail); and the largest shopping centre to have been formally marketed and sold this year.”
Caneland Central is the largest shopping centre north of the Sunshine Coast, comprising a Gross Lettable Area (GLA) of approx. 66,000 sqm. The centre is anchored by a Myer Department Store, Woolworths & Coles supermarkets, and Big W & Target Discount Department Stores whilst supported by some 180 specialty retailers.
Mr Willis said, “The value proposition for major retail assets is compelling despite higher debt costs, because initial yields are attractive, and valuations were reset in 2020. In this instance, the sale of Caneland Central was originally agreed in April 2022, prior to the RBA’s monetary policy tightening, and was concluded in November 2022 following a 275-basis point increase to the cash rate,” said Mr Willis.
Mr Hatcher said, “In terms of asset performance, the operating fundamentals for retail investments have also continued to strengthen. For example, the moving annual turnover (MAT) in Caneland Central has increased by 23% in 5-years.
Sentinel CEO Warren Ebert said: “Like Casuarina Square, Caneland Central completely dominates its market. Every man, woman and child in Mackay comes to Caneland four times a month. You could never duplicate this centre and you also cannot find another 14ha site like this in the city, let alone even close to the city.”
“The sale of Caneland Central brings retail investment to $5.8 billion in 2022 (YTD), suggesting 2022 will be within the range of a typical year of $6-8 billion per annum.
“Syndicates are still the lead buyers for major retail assets in this environment and continue to be an important source of liquidity in the retail sector,” said Mr Hatcher.
JLL’s Head of Research – Capital Markets, Andrew Quillfeldt said, “Retail spending and shopping centre fundamentals have performed above expectations in 2022 given the strength of the consumer from high levels of household savings, solid labour market conditions and wage growth. The combination of revenue growth for many retailers and rebasing of rents has helped restore occupancy cost ratios to more sustainable levels.
“While capital has been cautious towards assets of scale, across all sectors, we anticipate there will be a rebound in investment demand as we approach the peak in the interest rates cycle in 2023 and there is more clarity about the macro-outlook and future funding costs,” said Mr Quillfeldt.
Mr Hatcher said, “Early-movers will have a broad cross section of opportunities as we move into the next phase of the investment cycle, particularly those that can largely equity fund transactions.”
Caneland Central is a strong performing and uniquely positioned asset. Since opening in 1979, the Centre has progressively expanded, most recently undergoing a substantial $230 million refurbishment and expansion in 2011.
The Mackay shopping centre is one of the strongest performing regional assets across Queensland, recording over 5.6 million annual visitations and a low average occupancy cost ratio across the specialty tenants of just 11.7%.
Related Articles
