03/09/2013 - 14:08

Perron puts more money into malls

03/09/2013 - 14:08

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Major private shopping centre owner Perron Group is investing heavily in its WA retail assets as competition for retail properties intensifies.

Perron puts more money into malls
BIGGER: Galleria Shopping Centre will undergo a $300 million upgrade, increasing trading floor space up to 90,000sqm.

Major private shopping centre owner Perron Group is investing heavily in its WA retail assets as competition for retail properties intensifies.

Perron Group will invest close to $300 million in three of its Western Australian shopping centres in the next few years, including about $150 million on an expansion of Morley’s Galleria Shopping Centre.

Stan Perron’s private property investment vehicle has already embarked on a $110 million expansion of the Cockburn Gateway centre and is planning to undertake a “small to medium” redevelopment of the Belmont Forum.

The expansion plans for Galleria will increase the centre’s trading floor space to 90,000 square metres at a cost of about $300 million, with Perron sharing this cost with its co-owner, Federation Centres, formerly Centro.

The joint owners are currently working through the structure plan for the expansion, but Perron Group general manager property investments Andrew Byars said he was hopeful construction would be under way within two years.

Perron Group’s investment in its WA centres will shore-up the redevelopment pipeline for the state’s major shopping malls along with Westfield’s proposed $192.2 million expansion of Whitford City and AMP’s $400 million investment in Garden City.

It’s a retail redevelopment wave that has the momentum to last the best part of a decade, according to Perron Group, as the state’s retail landlords leverage the Barnett government’s push to transform major shopping centres into community hubs.

The state government launched the Activity Centre Policy in 2010 with a view to expanding shopping malls to encompass a broader range of uses, including housing; but it has met some resistance from retail landlords, including Perron.

The exact shape of the Galleria expansion will emerge through the design and planning process, but it’s unlikely to include a residential component.

“There has been a push for residential within shopping centre sites. We certainly agree there needs to be some density in residential around the shopping centres but not necessarily on them,” Mr Byars told Business News.

“We certainly don’t profess to understand that type of property (residential); we are purely retail and commercial developers and it does constrain shopping centres going forward.

“You effectively lose control of part of the site so you don’t want it (residential) necessarily sitting on top of a shopping centre. There are areas that are good for mixed-use development, some of the inner-city areas … but that’s not really what we do.”

Perron’s reluctance to diversify into residential property reveals much about the group’s single-minded attitude to retail acquisitions.

Mr Byars would not be drawn on how close Perron was to announcing any fresh acquisition, except to say there were a couple of properties they were “casting their eye over”.

However he did reveal the market for retail assets, particularly the sub-regional centres Perron was focused on, had moved sharply during the past 12 to 18 months, with valuations close to pre-GFC levels.

 “The market is pretty warm at the moment, which makes it more expensive and it’s getting harder; asset pricing is almost where it was pre-GFC,” Mr Byars said.

“It’s almost a coming together of the markets. In 2007, people wanted to buy and no-one wanted to sell and then the GFC hit and everyone wanted to sell and no-one wanted to buy, and it seems in 2012 is started to balance out.”

Perron Group swooped on the half share in Galleria in 2012, paying $690 million for a 50 per cent interest in the Morley centre along with a half share in Adelaide’s Centro Colonnades, and 50 per cent of Centro The Glen in Melbourne.

These three centres were the prize assets of Centro’s once sprawling retail empire and the decision to put a half share of each of these malls on the market came out of the group’s radical $7 billion restructure process.

Perron Group owns three shopping centres outright in WA – Cockburn Gateway, Mirrabooka Square and Belmont Forum. It also has five retail centres in NSW and Victoria as well as a portfolio of office properties, including a half share in Central Park.


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