Primewest pays $70m for Southbank retail, childcare investment

A mid-2019 Google Street View image of the corner which made for Melbourne Square Shopping Centre.

OSK Group has sold Melbourne Square Shopping Centre – a component of its $2.8 billion master-planned residential-based village in Southbank – for $70 million to Primewest’s Daily Needs Retail Trust (PWG).

At the south west corner of Kavanagh and Power streets, the asset includes an 87 place childcare centre and 120 car parks.

It also contains a two-storey supermarket spreading 3935 square metres, a BWS and five specialty stores.

JLL’s Stuart Taylor, Tom Noonan and Sam Hatcher brokered the sale for a joint venture comprising Malaysia’s OSK and Employees Provident Fund.

The price reflects a 4.73 per cent yield.

Melbourne Square Shopping Centre

Woolworths – which is set to open its Melbourne Square store tomorrow – is committed for 15 years; Think Childcare until 2040.

The investment’s Weighted Average Lease Expiry by income is 13.87 years.

“This transaction further affirms the strong demand for defensive retail assets which are underpinned by non-discretionary tenants,” Mr Taylor said.

The sale is the biggest for a Victorian neighbourhood centre in 2020, he added

Melbourne Square has been taking shape over a two hectare site for years an open-air car park, which cost OSK subsidiary PJ Holdings $145m in 2014.

EPF acquired a 49pc stake for $154m in 2017.

Upon completion the village is set to contain six towers, one for a Hilton Hotel and another for an office, as well as a 3745 sqm park (story continues below).

Southbank’s population is expected to exceed 53,000 by 2041 – a 97 per cent rise on today, Mr Taylor added.

Melbourne Square SC will be PWG’s trophy: John Bond

“The sale of Melbourne Square Shopping Centre is a strong outcome for our stakeholders, but also for the current and future residents of Melbourne Square and the broader Southbank area,” according to Chong Boon Woong, chief executive officer of Yarra Park City Pty Ltd, the joint venture partnership vendor.

“Primewest has a strong track record of managing prime retail assets such as this and we have full confidence they will continue to deliver world-class amenity and retail offering to the precinct”.

The occupier is also now a key PWG client.

The incoming owner’s executive chairman, John Bond, said the fund was launched in the height of the COVID pandemic with the purchase of shopping centres in Sydney’s Spring Farm, and a later Pemulwuy and West Ryde – all anchored to Woolworths.

“We are delighted to have secured Melbourne Square as a “trophy” asset, with the Woolworths store forecast to trade extremely well due to the intensive residential development in the area as well as the flow on effect from the surrounding entertainment, commercial and university campus amenities,” the businessman added.

“The ongoing development and other growth at Southbank will ensure strong population growth for several years, despite the current challenging environment”.

Primewest has outlaid $230m for PWG with plans for more.

Longer term the fund aims to be supported by a network of institutional investors; its biggest partner to date is Singapore sovereign wealth fund GIC.

Last week the Perth based manager acquired three childcare centres for a new trust, Primewest Income Property Fund.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of