IP Generation snares mall stake below valuation

The Rockingham Centre contains 184 retailers.

Chris Lock’s IP Generation has snapped up a half stake in south west Perth’s Rockingham Centre for $180 million.

JD Sports opened at the Rockingham Centre in September.

The result marks a major loss for seller AMP Capital, which paid the Future Fund and Canada Pension Plan Investment Board $305m in late 2017 – a peak in the property cycle.

That deal reflected a sub six per cent net passing yield.

The latest is speculated to be 8.5pc, with a capitalisation rate of seven pc.

Vicinity Centres, which owns the balance of the 23.1 hectare centre, valued it at $445m in mid-2022 (assuming a 5.75pc cap rate and seven pc discount rate).

AMP held its share in the Shopping Centre Fund, the management of which is soon to be taken over by Dexus.

Rockingham Centre

Developed 52 years ago and last renovated in 2009, the Rockingham Centre at 1 Council Avenue contains 62,204 square metres anchored to Ace Cinemas, Coles, Kmart, Target and Woolworths; all up there are 184 tenants filling 97 per cent of the area.

The Weighted Average Lease Expiry is 3.6 years.

There are also 3229 car parks.

The property was marketed for its development upside with a 4.2ha tract zoned Strategic Metropolitan Centre (story continues below).

IP Generation recently sold a Miranda shopping centre to Woolworths.

CBRE marketing agent Simon Rooney said the deal is the largest for a 50pc interest in a shopping centre since Invesco sold EG Grand Plaza in Brisbane’s Browns Plains a year ago for $215m.

“The Rockingham transaction demonstrates the renewed demand for quality sub-regional and regional assets with a focus on non-discretionary spending,” he added.

“There is particularly strong interest in assets which offer strategic value-add opportunities,” according to the executive.

IP deals in another bargain

The Rockingham Centre acquisition comes four months since IP sold Miranda’s Lederer Centre to Woolworths for $68m, just over double the price it paid Paul Lederer in mid-2021.

Also last year, the fund manager banked $40.06 selling Torquay’s ex-Quiksilver HQ after a refurbishment.

That asset cost the group $15m in 2018.

In 2021, Mr Lock paid QIC $185m – or $10m below the then-book value – for a half share of Westfield Helensvale on the Gold Coast.

Also two years ago, IP picked up Mildura Central, in north west Victoria, for $81.1m, marking a loss for the vendor, Vicinity, which outlaid $109.75m in late 2014.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.