Scentre Group is paying AMP Capital Diversified Property Fund (ADPF) $575 million for a half share, and the management rights, of the Garden City Shopping Centre in Booragoon, about 14 kilometres west of the Perth CBD.
The deal, negotiated by AMP Capital for the Fund – which will retain the other half – is the biggest ever retail transaction to occur in Western Australia.
The centre – which will by this weekend be rebranded Westfield Booragoon – is the state’s best performing.
On a 18.3 hectare block, it is earmarked for a $750 million renovation and extension (artist’s impressions, below).
Many of the shopping centre’s occupiers are on holdover leases waiting for it to begin.
The $575 million sale price is a 3.6 per cent premium to the entire asset’s most recent ($1.1 billion) book value, which was already based on a low capitalisation rate of 4.75 per cent.
The deal comes a month after we reported that a half share in Adelaide’s Westfield Marion complex traded to Singapore’s SPH REIT for $670 million – making it the country’s highest priced retail sale this year.
The vendor of Westfield Marion, the Lendlease managed Australian Prime Property Fund, had the half share valued at $737.5 million when the asset hit the market in April.
Westfield Booragoon a trophy – about to get a lot bigger
According to Shopping Centre News’ 2018 Big Guns Report, Garden City was ranked the state’s most productive for speciality turnover per square metre – and was the fourth nationally.
It contains 72,843 square metres of lettable area tenanted to six majors and eight mini-majors. There are more than 160 smaller stores.
The proposed $750 million renovation would see the lettable retail area increased to about 120,000 sqm.
Colliers International’s head of Retail Investment Services – Australia, Lachlan MacGillivray, and CBRE Head of Retail Capital Markets – Pacific, Simon Rooney, marketed the half-share for AMP Capital.
AMP Capital been affiliated with this shopping centre for over 25 years.
It also has a relationship with Scentre, co-owning Liverpool Southland, Tea Tree Plaza and Warringah Mall.
“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 [Moving Annual Turnover] per square metre,” Mr MacGillivray said.
“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 $1.82 billion, which is $115 million shy of 2018’s regional sales,” the Colliers agent added.
“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.”
Westfield Booragoon serves a trade area of over one million residents – about 49% of metropolitan Perth’s population.
The spending power of this catchment is estimated at $15.1 billion, the agents said, and expected to more than double to $31.8 billion by 2036.
Mr Rooney said that demand for core retail assets is increasing “primarily from major offshore investors looking for accretive, sustainable returns and a diversified income stream and asset base”.
The broker, who only five months ago moved to CBRE from JLL, added “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.”