QIC has picked up the two year old Craigieburn Junction homemaker centre, in Melbourne’s north.
The $135 million deal is being struck at a 5.4 per cent yield.
The vendor, New York based PGIM – Prudential Financial’s asset management arm and a top 10 global asset manager, controlling c$2.04 trillion of real estate – purchased it a month before it was set to open, for $100m.
That seller was the developer, Oreana Property Group.
The QIC deal comes five months since Harvey Norman outlaid $97m for Taylors Lakes’ Watergardens Homeplace, in the north west.
Last year, Assembly Funds Management – which is part backed by the Lowy family – partnered with Cadence to buy Sunshine North’s City West Plaza for $39m.
On 6.05 hectares at 420-440 Craigieburn Road, on the north west corner of Aitken Boulevard, Craigieburn Junction contains 25,086 square metres of lettable area – 4.2pc of which is vacant.
The Weighted Average Lease Expiry, by income, is 7.29 years.
Most of the rent (87pc) is collected from national chain retailers – Freedom, Nick Scali and Supercheap Auto amongst them.
The property also contains a Caltex service station, Hungry Jack’s restaurant and 600 car parks.
QIC will be able to claim depreciation benefits.
Craigieburn forms part of a major growth corridor, 25 kilometres north of the CBD.
The suburb contains two neighbourhood activity centres – one including the Highlands shopping centre which Stockland sold to private investor, Laura Wong, for $43m in 2018 (story continues below).
Value-add opportunity: QIC
QIC will hold Craigieburn Junction in the Active Retail Property Fund (QARP).
Fund manager, Core Plus Strategies, Charles Occhino said the property offers a high-exposure location (some 26,000 cars pass a day) and value-add opportunity.
“The acquisition of this defensive retail asset showcases QIC’s conviction in the core plus real estate asset class, and is a fitting addition to QIC’s established, high-quality $1.1b core plus portfolio, consisting of a diversified exposure in retail, industrial and office assets,” the executive added.
“In the wake of the Your Future Your Super (YFYS) legislation, investor appetite in the core plus sector has strengthened,” according to the executive.
“Given YFYS assesses performance against the core real estate benchmark, investors will be rewarded for taking a portion of their investment holdings in a core plus exposure”.
“Large Format Retail assets are becoming more widely accepted in the marketplace, which is why we are seeing new breeds of capital enter into the sector and as a result, tighter yields,” Mr Dowers said.
“There is a growing weight of capital looking to get an allocation to the tightly held Large Format Retail sector,” Mr Willis added.
“Institutional grade centres like Craigieburn Junction are unique in the Australian market with this being the largest transaction since 2018,” according to the executive.
QIC will begin managing the asset on September 30.
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