Sydney’s Roselands Shopping Centre sells for $167m

22 October 2021

Hong Kong investment house JY Group has secured a 50% interest in Roselands Shopping Centre for $167m in the latest of a string of Regional Shopping Centre sales.

The 63,500sqm mall is host to Coles & Woolworths, Target and Myer and 105 specialty stores. The Centre was recently refurbished by Vicinity at a cost of $90m to incorporate the “The Markets”, a new fresh & premium food retail experience.

Roselands opened in 1965 and was once billed as the largest shopping centre in the southern hemisphere. At that time, The Centre, which was developed by Grace Brothers Limited featured a 4 level large Grace Bros department store, Coles Variety Store, Coles New World Supermarket, a cinema known as Roselands Theatre Beautiful and 87 speciality stores. It was expanded in 1981 to 122 specialty stores.

In 1998, the Centre was acquired by Centro Properties Group and Abu Dhabi Investment Council. Centro went under in 2011 with Federation Limited taking control and rebranded the centre to Roselands in 2014. Federation ultimately became Vicinity Centres.

The deal with JY Group was struck around a 6.3% passing yield and about 6.5% fully leased. Vicinity holds its interest on a 6.25% rate but with with impairments which took the book value to $141.5m.

JY Group currently own three Melbourne shopping centres, including Casey Central, which it acquired in partnership with Haben Property Fund from British investor M&G for $225 million in July.

Simon Rooney has brokered the sale on behalf of Challenger.

Challenger acquired their 50% stake in Roselands in 2013 as part of deal to acquire a stake in 6 Centres from the Group for $602m. The other assets included Bankstown Square in New South Wales, and the convenience centres at Toormina and Lennox, in New South Wales, Sunshine in Victoria and Karratha in Western Australia.

Vicinity and Challenger both sold the Toormina Centre in 2018 to Fort Street for $83m and whilst collectively listing the Lennox Centre in Emu Plains in 2019, Challenger end up acquired Vicinity’s stake for $31.5m.

Challenger’s sale of Roselands comes as part of a broader strategy in dealing with their direct real estate holdings. In 2019, the group sold out of 30 Makerston Street Brisbane for $103m, the NEXT Hotel in Brisbane for $150m, Corio Central sold for $101m and 31 Queen Street Melbourne VIC for $200m.

Whilst some assets sit outside the Challenger Life business, the group hold a $3.5bn property portfolio in their Life company, representing about 16% of the Groups’ investment portfolio, down from 18% at 30 June 2020 (predominantly due to gains in other asset classes). The Group hold’s a 60% exposure to Australian office assets, 21% exposure to retail assets, 6% to industrial assets and 10% to Japanese retail assets.