It’s no surprise that a retail asset as sought after as Westfield Eastgardens in Sydney’s east has achieved a $720 million price tag for 50% of the asset. This afternoon Scentre Group took a 50% stake in Westfield Eastgardens from Terrace Tower Group for $720 million, representing a 4.25% capitalisation rate. The sale is in the top 5 largest single-asset retail transaction in Australia. Shopping centres for sale in Sydney’s east are a rare occurrence, with a high demographic, a growing population and an asset yearning for development, it will be one of the biggest retail transactions this year – if not the biggest.
Westfield Eastgardens has significant redevelopment potential for both retail expansion and mixed‐use development given its location within an area that is undergoing substantial renewal.
Scentre Group CEO Peter Allen said “In line with the Group’s strategy, this transaction is a rare opportunity to invest in one of the highest quality ‘living centres’ in Australia. Westfield Eastgardens is regarded by planning authorities as one of Sydney’s ‘strategic centres’ with a trade area that has strong forecast population growth and investment in infrastructure including increased public transport. The centre presents redevelopment opportunities including the introduction of local and international fashion retailers and expansion of the dining, entertainment and lifestyle offering. In addition, Westfield Eastgardens offers a unique opportunity to create value through mixed‐use development including commercial, accommodation and education facilities.”
Last year Indooroopilly Shopping Centre (50% share) sold for approximately $800 million in November 2017 to two AMP Capital funds – the largest ever single-asset transaction in Australia and a record for Queensland retail property prices. Also once a Westfield centre Indooroopilly Shopping Centre is in the regional centre asset class and was highly sought after by a number of parties.
Westfield Eastgardens was sold by Simon Rooney of JLL, on behalf of Terrace Tower Group which has held the full ownership of Westfield Eastgardens since it opened in 1987. Terrace Tower Group was founded by John Saunders in 1985, and John was previously Co-Founder of the Westfield Group with Frank Lowy. Now Terrace Tower Group is run by the Saunders next generation of family with a board of experts, and is a diversified real estate group focused on strong, steady growth owning a number of commercial and international properties including Supa Centa Moore Park in Sydney’s east.
Westfield Eastgardens opened on 23 September 1987 and was the largest shopping centre in Australia for a short period until Chadstone in Melbourne was redeveloped. The centre was redeveloped in 2002 and Westfield Eastgardens was the first shopping centre in New South Wales to house three discount department stores, Kmart, Target and Big W. Again redeveloped in 2013, the centre now also contains three supermarkets, 230 retailers with parking for 3,263 cars and an upgraded Hoyts. The centre is 84,220m2 of total lettable area, making it rank 40th in the 2018 Big Guns survey in terms of GLA. Scentre Group have been the manager of the centre since it opened.
JLL’s Head of Retail Investments – Australasia, Simon Rooney said “This is another landmark transaction. Scentre Group’s acquisition is a strong positive endorsement of the retail outlook.”
“Investor sentiment is very positive towards core retail assets such as major regional shopping centres. Owners are repositioning their portfolios towards defensive and high quality retail assets, which will continue to attract leading retailers and capture a growing share of consumer spend,” said Rooney.
Westfield Eastgardens is a strong performing major-regional shopping centre which was ranked 14th for MAT/m2 in this year’s Big Guns survey, making it one of the higher performing regional centres.
“Assets of this calibre are very highly sought after. The competitive pricing reflects the strong trading performance of the asset, growth in the trade area, improving social-economic profile and the improved connectivity of the new South East Sydney Light Rail. Investors were attracted to the future mixed-use/residential opportunities of the site and the imminent retail development potential to enhance medium and long-term returns.”, said Rooney
Look out for the next edition of Shopping Centre News magazine which features the Annual Retail Investment Market Review and lists all the retail property transactions that have occurred in FY2018. Click here to subscribe and enjoy full benefits of a premium membership.