$275m week for retail, industrial sectors

THE lively start to the year for Perth’s property market has continued, with four substantial retail and industrial properties changing hands in the past week in deals worth an estimated $275 million.

The largest sale was a 50 per cent stake in Centro Mandurah shopping centre, which is believed to have sold at or about book value of $124 million.

The Phoenix shopping centre in Spearwood has also changed hands, and property agents are confident more centres will be sold this year.

In a substantial transaction in the industrial market, a Charter Hall fund has acquired a 50 per cent stake in Metcash’s Canning Vale distribution centre. This was the second Charter Hall deal of the year and the fourth significant industrial property in Perth to change hands.

The Mandurah deal was part of the long-running restructuring of Federation Centres, the company formerly known as Centro Retail.

It announced last Friday the sale of 50 per cent interests in four sub-regional shopping centres and one neighbourhood centre, in a $371 million deal with fund manager ISPT.

These included two properties in Western Australia - Centro Mandurah with a book value of $248 million, and the Halls Head shops with a book value of $28 million.

The Federation sale is further evidence of the dominant retail property investment theme in 2012, according to Jones Lang Lasalle, which handled the sale.

JLL’s Australian head of retail investments, Simon Rooney, said listed real estate investment trusts were recycling capital by selling down part or whole stakes in property assets at book value or a small premium.

The Federation portfolio sold at a 2.9 per cent premium to book value.

It follows Federation’s sale last year of a 50 per cent interest in three major regional shopping centres, including the Galleria in Morley, at a 3.7 per cent premium to book value.

Federation managing director Steven Sewell said the latest transaction was on an average yield of 7.49 per cent.

An unlisted property trust managed by Singapore’s Rockworth Capital Partners was the buyer of Phoenix shopping centre, for $75.8 million.

The sale, which was foreshadowed last August by WA Business News, is Rockworth’s second shopping centre purchase in six months, after it bought Beechboro’s Altone Park centre for $15.9 million.

Colliers International director of retail investment services Mark Werret, who handled both sales, said 2013 was off to a strong start in the retail sector.

“We are looking forward to announcing a couple more significant sales that are due to settle in the coming weeks, one of which involves another offshore buyer. There is real renewed buyer focus on all sectors of the retail market.

“We are expecting to see very strong interest in Kelmscott Plaza and South Lakes Shopping Centre, which have just been taken to market.”

The Charter Hall deal followed the establishment of a new industrial property fund, the Core Logistics Partnership, with two Australian institutions.

The new fund has acquired a 50 per cent stake in the Metcash distribution centre for $63.5 million, equating to a yield of 8.7 per cent. The fund also acquired an AMCOR logistics facility in Melbourne.

Charter Hall bought an initial 50 per cent interest in the Metcash centre in March last year for $61.5 million, through its Core Plus Industrial Fund.

The vendor in both cases was the Australian Unity Diversified Property Fund.