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Dexus (ASX:DXS) to test market in a $700 million retail play

Commercial, Real Estate
03 September 2021 12:18 (AEDT)

Gold Coast’s Pacific Fair Shopping Centre. Source: CBRE

Leading Australian retail owner-managers, institutional funds, and heavyweight offshore investors are expected to lead the bidding for landmark stakes in the first super-regional shopping centre opportunities in Australia since 2019.

Two asset stakes are on offer, a 20 per cent investment in Gold Coast’s Pacific Fair Shopping Centre and a 25 per cent stake in Sydney’s Macquarie Centre, amid increased investor demand for core retail assets.

Dexus Wholesale Property Fund has hired CBRE’s Simon Rooney, as well as JLL’s Nick Willis and Sam Hatcher, to lead the expressions of interest campaign.

Prior to a recent merger with Dexus Wholesale Property Fund, the sought-after interests were held under the AMP Capital Diversified Property Fund.

The most recent transactions in this market sector involving the late 2019 sales of Westfield Marion in South Australia (50 per cent) for $670 million from APPF to Singapore Press Holdings and Garden City Booragoon in Western Australia (50 per cent) for $670 million from APPF to Singapore Press Holdings.

“The positive turnaround in institutional investor sentiment and capital reallocation back to retail is in its early stages, but clearly evident and is centred on assets which are considered the best of the best — criteria clearly met by Pacific Fair and Macquarie Centre,” Mr Rooney, said.

“We have seen a material rebasing in retail asset values over the past 12 to 18 months, together with a ‘mark to market’ rental reset. This, combined with monthly sales and traffic growth and the historically attractive retail yields on offer, is clearly compelling – presenting a real window of opportunity for major domestic and offshore investors.”

Mr Willis said high-quality retail assets have performed well out of lockdown

“The opportunity to acquire a top 1% asset, regardless of the real estate sector, is very rare; this is one of those opportunities,” he said.

The Pacific Fair Shopping Centre, with a gross lettable area of over 150,000 square metres, is Australia’s sixth biggest shopping centre.

The mall is listed among the top ten performers in Australia following a $670 million renovation in 2016, according to the annual Shopping Centre News Big Guns rankings, with over $890 million in moving annual turnover (MAT).

In the last ten years, none of the 12 super-regionals sold has placed in the top ten for total MAT.

The Macquarie Centre, which is around 135,000 square metres in size, is the first time in almost 19 years that a super-regional Sydney shopping centre has been formally offered.

With current concept permission for a further 148,000 sqm of mixed-use gross floor area, comprising commercial, residential, and alternatives, it has medium-term mixed-use development potential.

Shares in DXS are up 0.38 per cent to $10.66 as of 11:54 am AEST.

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