- Hong Kong’s Link REIT purchases a 50 per cent stake in the Queen Victoria Building, The Strand Arcade and The Galeries in Sydney for $538.2 million
- The purchase is Australia’s largest CBD retail mall transaction since 2017, when Vicinity Facilities bought a 50 per cent stake in the same trio of centres
- The properties include a total gross lettable space of 34,877sqm and 334 tenants, 46.1 per cent of whom are unique and do not have another location in Sydney’s CBD
- About $4.52 billion flowed into Australian retail investments in Q2 and Q3, an increase of 118 per cent over the same time last year
In a major transaction estimated at $538.2 million, Hong Kong’s Link REIT purchased a 50 per cent stake in the Queen Victoria Building, The Strand Arcade and The Galeries in Sydney.
Simon Rooney, CBRE’s Head of Retail Capital Markets – Pacific, introduced Link REIT and EG Funds (Link REIT’s Australian investment manager), and negotiated the sale on behalf of Singapore sovereign investor GIC, with the campaign co-managed by Lachlan MacGillivray of Colliers International.
The purchase, which was completed at a core capitalisation rate of five per cent, is Australia’s largest CBD retail mall transaction since late 2017, when Vicinity Facilities bought a 50 per cent stake in the same trio of centres, which it continues to operate.
“The Link REIT/EG acquisition is expected to instill further confidence into Australia’s retail investment sector, demonstrating the enhanced institutional demand for core retail assets and the ongoing investor confidence in the future of CBD retailing,” Mr Rooney said.
“Assets of this scale, quality and reputation are rarely sold and in the case of The Queen Victoria Building (QVB), The Strand Arcade and The Galeries, this was the first time the portfolio had been publicly offered to the market.
“These iconic centres are regarded as among the best in Australia and dominate Sydney’s core retail precinct, which is positioned for recovery following the end of lockdowns, as workers, tourists and shoppers return to the CBD.”
According to CBRE statistics, about $4.52 billion flowed into Australian retail investments in Q2 and Q3, an increase of 118 per cent over the same time the previous year and much ahead of the comparable rises in office and industrial deals.
Vicinity’s $358 million acquisition of a half share in Harbour Town Gold Coast from the Lendlease-managed APPF R, UniSuper and Cbus Property’s partnership with AMP Capital to take majority ownership of Pacific Fair on the Gold Coast and a half stake in Sydney’s Macquarie Centre for $2.2 billion.
Another major transaction was Haben Property Fund and Hong Kong-based JY Group’s acquisition of Wollongong Central for $402 million.
The purchase of a 50 per cent share in the Queen Victoria Building, The Strand Arcade and The Galeries is Link REIT’s second investment in Australia, after the $683 million purchase of Sydney’s 100 Market Street office skyscraper two years ago.
As part of an open-ended mandate with EG Funds Management, the company has been exploring new assets.
The three Sydney centres service a 3.8 million-person resident total trade area, making it the most densely populated residential region in Sydney and one with a combined retail spending power of $60.6 billion. The centres also serve a workforce of 168,460 people in the Sydney CBD, the biggest in Australia.
The centres had a moving annual turnover (MAT) of $613 million at the start of 2020 and 61 million visitors each year. The Strand Arcade is ranked first in Australia for overall MAT, followed by QVB, while The Galeries is ranked fourth in Australia for total specialised MAT, according to CBRE.
The properties include a total gross lettable space of 34,877sqm and 334 tenants, 46.1 per cent of whom are unique and do not have another location in Sydney’s CBD.
With over 200 metres of exposure to George Street, the QVB has one of the biggest footprints in Sydney’s major retail area. It is Australia’s largest Victorian Arcade and a historic Sydney landmark.
The Strand is the CBD’s only existing arcade of its kind and is recognised as a premium retail centre holding many of Australia’s greatest designers, whilst The Galeries is a lifestyle and cultural destination for fashion and food that gives a one-of-a-kind shopping experience. It has unique stores in Sydney, as well as a high-performing food court and fashionable dining operators.
“The acquisition of this prime retail portfolio is part of our Vision 2025 growth strategy to diversify and improve our portfolio mix,” Link REIT chairman Nicholas Allen said.
“We are excited to have captured an opportune moment to invest in these iconic Australian retail assets.”