Lendlease in $0.5bn sell off

Lendlease has sold Southlands Boulevarde in Willetton for $92.5 million to national shopping centre owner HomeCo, as part of a divestment of $522.5 million retail assets.

The multinational property group sold 45 Burrendah Boulevard centre and Menai Marketplace in NSW for a total of $242.5 million to HomeCo, via its sub-regional retail fund.

Lendlease purchased the Willetton asset for $60 million in 2010.

In addition, Lendlease entered an agreement to sell Caneland Central shopping centre in Queensland to Sentinel Property Group for $280 million.

The company said in a statement today, about the HomeCo sale, that there was strong interest in the portfolio from an active buyer pool attracted to the productive sales performance of the properties.  

HomeCo listed as HMC Capital Managed Funds, or HDN on the Australian Securities Exchange, will house the assets in its Daily Needs REIT. 

The group floated on the ASX in 2019 and owns more than 50 shopping centres Australia wide.

HDN chief executive Sid Sharma said the acquisition was consistent with the company’s strategy to acquire convenience focused assets with development potential.

Southlands generates about $139 million of turnover per annum, with 80 per cent of income weighted to daily needs tenants.

An Aldi supermarket is set to open at the centre in the first half of next year, complementing the existing Coles and Woolworths.

Lendlease head of mandates Matt Bowyer said the sale of these assets was a strong outcome for investors.

“Sub-regional retail assets offering this type of essential convenience continue to perform well, supporting positive investor sentiment towards the sub-sector,” he said.

“The outlook for retail remains positive, with continued confidence in the sector experienced by strong sales often exceeding pre-Covid levels over the last year.”

JLL’s Nick Willis and Sam Hatcher and CBRE’s Simon Rooney and James Douglas brokered the portfolio sale.

Mr Willis said overall transaction volumes for sub-regional shopping centres were down on last year’s record of $13 billion nationally, but recent transactions would boost 2022 numbers significantly.

“With the sale of Caneland Central announced today, and both these assets, total volumes are expected to reach $6 billion showing over a 50 per cent decline in transactions,” he said.

“However, the Sub-Regional sector has attracted the greatest weight of capital.

“This demand for the sub-sector has been evidenced by the sheer transaction volumes totalling 14 sub-regional transacting totalling approx. $1.64 billion and 5 per cent above the 5-year average.”

Mr Hatcher said the sub-regional investment market emerged post COVID as “the powerhouse sub-sector of the retail investment market”.

“The land rich nature of these centres, diverse income profiles and dominance within their trade areas continue to attract a deep and diverse buyer pool,” he said.

The deals came as Lendlease denied media speculation that it was set to enter a major equity raising.

“The group is confident organic capital generation via retained earnings, combined with incremental debt, is sufficient to fund its current business plan,” Lendlease said in a statement.