Scentre buys Garden City Shopping Centre for $575m

Scentre buys Garden City Shopping Centre for $575m

13 December 2019

Garden City Shopping Centre in Booragoon, Western Australia, has been acquired by Scentre Group who will partner with AMP Capital in the future ownership and development of Western Australia’s best performing retail centre.

The 50 per cent stake $575 million sale represents the largest retail transaction ever to occur in Western Australia and reflects a 3.6 per cent premium to the asset’s most recent valuation which was based on a capitalisation rate of 4.75 per cent. It includes long-term property management, brand and development rights.

The mall is held in an unlisted property fund run by AMP Capital, which will remain the owner of the remaining half stake.

The fund manager put the mall on the market in July this year with a view to selling the entire shopping centre or bringing in a co-owner.

“This is an excellent outcome for our investors,” said Brett Williams, the fund manager for the AMP Capital Diversified Property Fund.

“Encouraged by recent investor appetite in high quality shopping centres, our strategy was to introduce a joint venture partner to reduce asset concentration and provide further diversification for our investors.”

“Opportunities to purchase the best assets like Booragoon are rare,” said Scentre chief executive Peter Allen.

Colliers International’s Head of Retail Investment Services – Australia, Lachlan MacGillivray with CBRE Head of Retail Capital Markets – Pacific, Simon Rooney negotiated the sale on behalf of ADPF.

The highly-prized regional shopping centre is located 13.5km south west of the Perth CBD in the highly affluent metropolitan suburb of Booragoon in the City of Melville. The centre occupies a landmark 18.6ha site with immediate and significant development potential.

Anchored by retailers David Jones, Myer, Kmart, Woolworths, Coles and Hoyts Cinema, Garden City Booragoon is Western Australia’s best performing regional shopping centre and one of Australia’s best performing shopping centres by MAT per square metre.

“Garden City Booragoon is one of the most dominant shopping centres in Australia and is ranked in the top five regional centres nationally for specialty MAT per square metre. This is the highest specialty productivity for a regional centre that has transacted in the last ten years,” said Mr MacGillivray.

“The Centre has incredible fundamentals with approximately 9.3 million annual visitors and has an average spend of $68 per person – which places Garden City in the top three centres nationally for average spend per visitor.

“The sale of Garden City takes this year’s total regional centre sales to $1.820 billion, which is $115 million shy of 2018’s regional sales. We are seeing experienced and sophisticated retail investors seizing the opportunity to invest in high quality and high conviction assets which are rapidly evolving to meet the needs of future customers.”

Garden City serves a Total Trade Area of over one million residents representing some 49% of the total metro-Perth population.

The Total Trade Area’s retail spending power is one of the strongest in Australia estimated at $15.1 billion and is projected to increase to $31.8 billion by 2036. 

Simon Rooney, Executive Managing Director, Retail Investments Pacific at CBRE said, “The sale of Garden City represents an investment into one of Australia’s strongest and best performing regional centre assets, which is a clear sign investors are seeing attractive relative value in the sector and moving on high quality retail plays.”

“Demand for core retail assets is increasing, primarily from major offshore investors looking for accretive, sustainable returns and a diversified income and asset base. On the domestic front, we expect the Garden City sale to Scentre Group to kick start local investors to re-enter the sector and strategically reshape and build high quality retail portfolios into the next cycle.”