Scentre Group (owner of Westfield destinations in Australia and NZ) has established a jointly managed fund with investment bank Barrenjoey Private Capital to purchase a 50% stake in Adelaide’s Westfield Tea Tree Plaza and the adjoining Tea Tree Plus for $308 million.
CBRE’s Head of Retail Capital Markets – Pacific, Simon Rooney exclusively negotiated the deal on behalf of a Dexus managed fund as institutional and private capital flows back into the regional shopping centre market.
The acquisition comes just weeks after the announcement of Vicinity Centre’s agreement with the Future Fund to acquire it’s 50% interest in Lakeside Joondalup, Western Australia, with additional major retail transactions expected to be completed in coming months.
Scentre Group and Barrenjoey have stepped into the Westfield Tea Tree transaction under a preemptive agreement, marking their first foray into funds management.
The Tea Tree Plaza deal represents South Australia’s largest regional shopping centre transaction since November 2019, when Paragon REIT and MA Financial took out a 50% stake in Westfield Marion for $670 million from the Lendlease-managed Australian Prime Property Fund Retail.
“The opportunity to acquire a 50% stake in a dominant and strong performing regional shopping centre in Adelaide’s affluent north-eastern suburbs garnered both domestic and offshore investor interest. This interest was underpinned by the centre’s genuine value-add potential, robust investment fundamentals, South Australia’s stamp duty exception and attractive retail yield spread relative to Sydney and Melbourne,” said Rooney.
“Active, well capitalised investors are opportunistically acquiring the best quality fortress malls, which are historically rarely traded and offer exceptional investment fundamentals.”
Rooney added, “This window of opportunity is beginning to close, with more investors looking to come back into the retail sector as interest rate volatility stabilises given the compelling returns on offer.”
Tea Tree Plaza has a total gross lettable area of 101,052m2 and is anchored by Myer, Big W, Kmart, Target and Harris Scarfe alongside a triple supermarket offering in Coles, Woolworths and ALDI, nine mini-majors and approximately 201 specialty stores.
The centre also includes a popular dining and entertainment precinct, offering 10 restaurants and a HOYTS cinema complex, forming part of the most recent redevelopment of the centre in 2018. An additional $40 million in upgrade works are set to be completed in the first half of this year.
Situated on a land rich site of 22.4ha, the landmark centre provides for significant future expansion potential, to cater for a growing catchment over the coming years.
Strategically located in Adelaide’s growing north-eastern suburbs, approximately 15km from the CBD, Tea Tree Plaza is managed and jointly owned by Scentre Group.
The centre draws 10.8 million customers annually and currently caters to a significant trade area population of more than 440,253 residents, which is forecast to reach 487,795 residents by 2041.
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