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Steven Leigh, QIC Global Real Estate

QIC enters 2016 continuing to execute a multi-billion asset renewal program, that is transforming our centres from traditional transactional shopping environments to curated spaces for experiences and entertainment.

The renewal program not only responds to the opportunity provided by capital markets, but acknowledges the changing forces at play in the retail market that continue to provide challenges and opportunities.

We saw a strong end to 2015, with retail sales growth meeting and exceeding expectations, and end-of-year sales particularly strong. There are encouraging signs that consumer confidence is improving off the back of lower petrol prices, record low interest rates and improvements in the unemployment rate.

While the broader economic outlook for 2016 remains uncertain, we remain optimistic about the outlook for the retail sector, and will continue to deliver on our commitment to transform our centres into spaces that provide a dynamic retail offering in combination with outstanding lifestyle, recreation, entertainment and dining experiences.

Delivering our transformation plan

During 2015 and now into 2016, we continue to actively manage our Australian retail and CBD commercial portfolio. Our ongoing multibillion-dollar asset renewal program focuses on a strategy to truly integrate retail with food, design, architecture, culture, wellness, learning, entertainment, public spaces and the latest technology.

Eastland Stage One launched

The first physical expression of this strategy is Eastland, our billion-dollar asset in the heart of Melbourne’s burgeoning eastern suburbs. Blending landmark architectural design, a state-of-the-art cultural and library facility, generous public space and new-to-market retail concepts, the new Eastland unveiled Stage One of its $665-million retail transformation in late October 2015.

Stage One of Eastland’s development brought together the best of Melbourne’s epicurean spirit, leading Australian and international fashion, food and lifestyle brands and world-class art to eastern Melbourne. The opening marked years of planning and development to deliver a world-class urban renewal project that has set a new benchmark in Australia for the consumer experience.

The heart of the new development is Town Square. A true community space, Town Square was developed in partnership between QIC Global Real Estate, the Maroondah City Council and Federal and State governments. It will become a vibrant cornerstone of the community both day and night, bringing the best of Melbourne’s food culture beyond the CBD. Town Square also includes Realm, a future-forward library, cultural, knowledge and innovation centre. It also houses the nationally significant Centre for Regional Knowledge.

Designer brands including Scanlan Theodore, sass&bide, Camilla, Calibre, Morrison, Gorman, Skin & Threads, Mecca Cosmetica, Jack London, Alpha 60, Rodeo Show, Oroton, Martin York, Scotch & Soda and Mecca Maxima have joined international brands including H&M, UNIQLO, Marimekko, Victoria’s Secret Beauty and Accessories and MAC. In total, over 100 new retailers opened their doors as part of Stage One.

The development also introduced next-generation innovation from Target and Hoyts as well as David Jones which unveiled its new-look store design, a template that will become the benchmark for all future stores.

With the launch of the first stage of Eastland, the community now has access to some new and exceptional retail experiences, with almost 40% of the brands that opened not currently available in Melbourne’s eastern suburbs.

Headlining the new Eastland’s dining line-up are celebrity chefs George Calombaris and Frank Camorra, who both opened new restaurants – Jimmy Grants’ Deluxe and Paco’s Tacos respectively.

They have joined other dynamic eateries in the vibrant Town Square, including Huxtaburger by Jeff Wong and Daniel Wilson; a new gastro-inspired casual dining concept from Seagrass Boutique Hospitality Group called Hunter & Barrel; The Cellar Door, a rooftop garden and bar from Dale White and Rebecca Gallagher of The Public Brewery; Gelatieri per Passione, the first ice creamery out of Italy for the Lavezzi family; AngAng by Chinta Ria Soul; and the popular inner city-fish and burger bar, Hunky Dory, to name a few.

The development also unveiled a world-class level of art to eastern Melbourne, with a series of works from celebrated artists David Bromley and Joost Bakker, as well as a collection of prominent female artists.

World-renowned Australian artist, David Bromley, revealed his largest mural project to date. An Australian first, the mural spans more than 1,600 metres and appears throughout Eastland. It is the first time Bromley has collaborated with a retail precinct. The piece is testament to Eastland’s commitment to creating a cultural playground for its guests.

Furthering Eastland’s commitment to public art, and in an explosion of Melbourne street culture, female artists, including French-born LucyLucy and Shannon Crees, who has had her work profiled at Banksy’s Cans Festival in London, have created artworks that will be located along Civic Place, Ringwood Street and throughout the Midway precinct.

I’m exceptionally proud of what we have delivered and continue to create at Eastland. Stage Two is due for completion in mid-2016.

$500 million revitalisation of Grand Central

This year we will launch the first stage of the landmark Grand Central development in Toowoomba, which will redefine the retail experience for Australia’s largest inland town and create a world-class destination with quality retailing, contemporary dining and food experiences, as well as an outstanding lifestyle offer.

Blending modern architecture and innovative design to create a superior new urban address that will appeal to Toowoomba’s thriving trade area and draw people from across the region, our vision for the new Grand Central is to create a magnetic destination for the community that embodies its pride, tradition, culture and opportunity. The project enjoys considerable community support from residents, businesses and the Toowoomba Regional Council and, once complete, it will double the size of Grand Central to approximately 90,000m2.

The new, two-level retail galleria will be an extension of Grand Central’s existing malls, and will seamlessly integrate and link with the new redevelopment across Dent Street with the current centre.

In addition to introducing discount department stores K-Mart and Big W, a new Woolworths supermarket and approximately 160 specialty retailers, the redevelopment will also incorporate an exceptional fashion offer including global high street and iconic Australian fashion brands.

It will also incorporate a new fresh food precinct and dining destination that will include a range of restaurants, cafés and street food.

Approximately 162,000 people live in the wider Toowoomba region, with that figure expected to grow to around 216,000 by 2036. Retail expenditure in the area is expected to exceed $4.2 billion in 2017, up from $3.7 billion in 2013. The Grand Central redevelopment is estimated to have a positive $1.2-billion impact on the Toowoomba local government area.

Preliminary works at Castle Towers make way for proposed $900 million development

Last year we commenced preliminary works to progress the proposed major development of Castle Towers located in the north-west corridor Sydney. The development will transform the centre into one of Australia’s most prominent and exciting urban shopping, entertainment and leisure destinations that will draw people from across the greater Sydney area.

Scheduled to commence construction in 2016, the transformation of Castle Towers will create a vibrant town centre destination where people can enjoy outstanding shopping, leisure, dining, entertainment and social experiences within one fully integrated location that befits the energy and vitality of the region.

The new design proposes to seamlessly consolidate the new development with the existing centre to create a unified retail, entertainment and leisure experience and a landmark destination that will increase the centre’s gross lettable floor area by up to 80,000m2 to in excess of 190,000m2.

The Development Application, currently with the Hills Shire Council, proposes to present an expanded and enhanced retail offer through the introduction of a number of new majors, mini majors and specialty retail (including iconic national and international brands), improved efficiency in retail layout, and a significant remodelling of the existing centre to ensure its style and offer befits its prime location within a strong and loyal trade area.

International expansion

In 2016 we continue to extend our existing joint venture relationship with Forest City Enterprises Inc. through the acquisition of a stake in Westchester’s Ridge Hill retail centre located in Yonker’s New York.

The agreement QIC has recently reached with Forest City sees us expand our interest in the attractive US market, and further strengthens our relationship with Forest City, a highly experienced and long-term investor in prime real estate throughout the US.

The agreement with Forest City brings the total number of assets acquired by QIC on behalf of its clients to 11.

In 2015 QIC acquired a 100% stake in The Shops at Tanforan shopping centre in the San Francisco Bay area of San Bruno, and assisted AustralianSuper acquire a 25% stake in Honolulu’s Ala Moana Centre.

Westchester’s Ridge Hill is a 120,774m2 open-air retail centre located approximately 25km north of midtown Manhattan in Yonkers.

It is anchored by Lord & Taylor, Whole Foods, a Legoland Discovery Centre, Dick’s Sporting Goods and RIE and approximately 70 specialty stores.

Current and future entitlements allow for additional developments incorporating retail, office and residential use, which will provide significant longer-term development potential to the site.

Building on our success

We firmly believe we have the right strategy in place to deliver outstanding integrated retail, leisure and entertainment destinations, which in turn creates continued strong results to QIC’s investors. QIC’s active management approach will ensure that individual assets and the portfolio as a whole continues to evolve, generates value for clients, and delivers exceptional customer and retail experiences.

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