Weekly Transaction Update – 21st December 2018

21 December 2018

This week we recorded 22 major transactions worth $1.36bn PGIM sells 25% of Coca Cola Place PGIM Real Estate have confirmed that it is selling a 25% stake in 40 Mount Street North Sydney to M&G Investments for $109.5M. PGIM are acting for the South Korea’s National Pension Service who holds a 50% interest in the building alongside Investa’s Commercial Property Fund. It is unclear whether PGIM are trading the remaining 25% held by the Pension fund. ICPF hold pre-emptives over the PGIM share and have likely been instrumental in introducing M&G Investments who are already co-investors with ICPF in 400 George St. The South Korean Pension Service bought its interest in the North Sydney tower stake from Investa for about $113.5m in 2011, effectively doubling its value in 7 years. Spanning 28,500sq m over 21 floors, the tower houses Coca-Cola Amatil and a mix of quality private sector tenants including Goodman Fielder and Vodaphone. M&G Real Estate, a unit of British insurer Prudential PLC emerged as a major purchaser of Australian commercial assets in 2006 and has also teamed and Mirvac Group with a 50% interest in the $800m office tower that it is proposed Suncorp will occupy in Brisbane’s CBD. M&G made its first Brisbane acquisition with the $119.1m purchase of HQ South in Fortitude Valley last year and in December 2016, the firm bought the Casey Centre, in Melbourne, from Scentre Group for more than $220m. The North Sydney sale is being handled by JLL and Savills. Cromwell buys in Townsville Cromwell Property Group has purchased the Energy Queensland headquarters in Townsville in north Queensland for around $63.5 million. The building at “420 Flinders Street, accommodates 500 employees and was constructed as part of the CBD Revitalisation Program in 2013. by the Lancini Group. It has ground floor retail space and more than 7,000 square metres of office space. The property is leased to Energy Queensland and the National Australia Bank with a 9.3yrs weighted average lease expiry. The acquisition will show a 7.3% initial yield.Cromwell will house the asset in its Direct Property Fund, a fund for retail investors which produced a 9.8% total return in the year to March 2018. The fund has 8 other investments.. Charter Hall Pick UP Campbellfield Plaza Charter Hall Retail REIT have acquired Campbellfield Plaza in Melbourne’s northern suburbs from ISPT for a total consideration of $74 million. The transaction reflects a fully let yield of 6.5%. The Centre is located on a 58,600sqm site on the corner of Sydney Road and Mahoney’s Road, Campbellfield, approximately 14 kilometres north of the Melbourne CBD. The Centre was originally constructed in 1983 and acquired by ISPT in 1995 before an expansion in 2004. The Centre has low site coverage of just 17,900sqm offering further redevelopment potential. The Centre’s WALE is 8.4 yrs (by GLA) and generates approx $4.6M in net income. The Centre’s anchor tenants include one of Victoria’s strongest performing Kmart stores, Coles, a latest format ALDI, and Officeworks. The Centre has an MAT of approx $112M. The major anchor tenants are either currently paying or are expected to pay percentage rent within the initial investment horizon or are under fixed rental increases. The Centre also comprises 19 specialty tenants and at grade car parking for over 800 cars. The purchase will be funded from the sale proceeds of Charter Halls recent disposal at Coomera, Qld and Young, NSW. JLL acted on the sale of the asset for ISPT. Blackstone acquire 50% of 60 Margaret St Pacific Alliance Group (PAG) have sold their 50% of 60 Margaret Street Sydney to Blackstone for approximately $420m. PAG picked up its interest in the asset in 2015 from superannuation fund MTAA Super for just over $300m. Blackstone will now work with co-owner Mirvac to extract greater value out of the asset which is well positioned alongside the Wynyard place development. The A-grade building, which consists of 36 levels of A-grade ­office space with 40,985sqm has ING ­Direct as a major tenant. The retail centre which comprises a further 6,419sqm is anchored by a street-level Woolworths supermarket and has more than 75 specialty stores. The Blackstone deal may have been made easier following their acquisition of a minority stake in PAG through its Strategic Capital Holdings Fund which is part of Blackstone Alternative Asset Management (BAAM) division. Figtree sells for $206M Singaporean group SPH REIT, in a joint venture with Moelis, have agreed to acquire Figtree Grove Shopping Centre in Wollongong from Blackstone for $206 million. The sale to SPH REIT reflects a cap rate of circa 6%. The 21,984sq m centre is anchored by a Coles, Kmart, and Woolworths together with two mini-majors and 72 specialty stores. The Centre is ranked 16th out of 100 in the SCN Little Guns survey and is pitched as the highest-turnover subregional centre in Wollongong witha total centre MAT of $196.4M with specialty stores trading well above industry averages. Blackstone acquired the Centre as part of the $783M Westfield portfolio in late 2015 and is one of the 11 centres Blackstone took to market as a portfolio sale in 2017 but then withdrew as sentiment turned against the portfolio sale. Blackstone also recently traded Waverley Gardens Shopping Centre to Elanor Investments for $178M, however Blackstone other major retail assets including Top Ryde Shopping Centre, Greensborough Plaza, Warrawong, Strathpine, Clifford Gardens, Forest Hill Chase and Brimbank Shopping Centre are still held by the group. Stockland Sell Major Landbank Stockland today announced it had exchanged contracts with Frasers Property Australia for the sale of The Grove residential community in Melbourne for $202.5 million, a 59% premium to book value. Stockland acquired the land under option contracts in 2010 from a range of local farm owners for a total price of circa $75M and achieved development consent in 2014. Since its launch in 2014 almost 1300 lots in the estate have been sold, with more than two thirds of these settled. When complete, the project is expected to include more than 2500 homes, alongside a supermarket, specialty stores, primary and secondary schools, a community centre and retirement village. Stockland has been under pressure to improve its balance sheet following the recent downturn in the market and the sale of The Grove was an obvious choice for Stockland given it’s other land holdings in Victoria. Stockland Managing Director and CEO Mark Steinert said: “This sale enables us to capitalise on market strength, and bring forward profits on a project that has scale and where we have already created significant value through buying well and creating an exemplar masterplanned community” Mr Steinert said: “Stockland retains a strong and long-standing investment in Victoria, with over 50 assets in the State valued at over $2.5 billion. Following this sale, we will continue to focus on developing our portfolio of 11 active residential communities in Victoria where we have a pipeline of over 24,000 lots, with over 5,600 lots remaining in the western corridor of Melbourne.” The sale of The Grove will result in gross profit realisation of $75 million, to be released over FY19-21 in line with the settlement timing of various parcels. The transaction was brockered by Biggins & Scott. Fort Street Take Up Keilor Central in $113m Deal Vicinity have sold one of their unlisted funds’ Sub Regional Centres in a $113M deal with Fort Street Capital, reflecting a 6.3% yield. Keilor Centre is located in a well-established suburb of Melbourne, 17 km west of the Melbourne CBD, and services a wide catchment area. The shopping centre is anchored by Coles, Aldi and Kmart and comprises primarily convenience-based retailers, including two mini-majors, 59 specialty tenants and two padsites. The centre is 99% occupied, with national retailers representing 72% of total income, including Commonwealth Bank, Australia Post, The Reject Shop, Vodafone, Specsavers, Hungry Jacks and KFC. The Centre sits on 9.1 ha of land and has a large on grade car park, proving capacity for further expansion of the Centre if required. David Rogers, Investment Director for Fort Street Real Estate Capital, the Fund’s Investment Manager, said: “We are very pleased with this acquisition of Keilor Central. It is an exceptional asset and a great quality investment for the Fund. The asset is performing strongly given its convenience-based retail offering and strategic location in a part of Melbourne with limited competition. Furthermore, there are a number of ways that we believe we can enhance the value of the asset. We have a strong track record of successfully repositioning assets and there is potential to improve the tenancy mix, as well as longer-term opportunities to add value to the asset.” The sale was brokered by Colliers. Review our other transaction data at ReSourceData. * indicates unconfirmed price or apportionment of a portfolio sale #ReDataSource