The Lendlease-managed Australian Prime Property Fund Retail (APPF Retail) has sold a large regional shopping centre in the far north Queensland to Fawkner Property, a domestic property investment group, for around A$390m (€238m) to meet redemption requests.
The shopping mall, Cairns Central, was sold at close to book value of A$400m (30 September 2023) to the Melbourne-based investor whose strategy is to buy recession-resilient real estate assets, including daily-needs and convenience retail.
Cairns Centre is the only regional shopping centre in the Far North Queensland region and benefits from the large tourist population visiting the area. Cairns is one of Australia’s largest regional cities with strong growth forecasts.
The sale of Cairns Central is the sixth asset sold by APPF Retail to meet redemption requests. Together, the fund has raised more than A$2.1bn from the divestments.
Anne MacSporran, fund manager of APPF Retail, said: “With the strategic divestment of this asset, APPF Retail will be able to close out the remaining redemption requests in the fund, providing liquidity to those investors who requested it.”
She said the price achieved for Cairns Central was a strong result for APPF Retail investors, particularly in light of market conditions experienced throughout 2023.
“The outlook for Australian retail is positive. With sales having rebounded strongly post pandemic and now stabilising to more normalised levels, the sector is supported by robust retail fundamentals, with growing demand and limited supply of retail space being one of the driving forces for future growth,” she said.
MacSporran said the fund was now in a strong position to execute its “prime urban growth centre” strategy, which focuses on owning and developing multi-purpose assets that dominate their trade areas.
APPF Retail, one of the first unlisted wholesale retail fund in Australia was established in 1994.
Fawkner Property representative CBRE said the sale represented Queensland’s largest regional shipping centre transaction since November 2017 when AMP Capital acquired a 50% stake in Indooroopilly Centre for A$800m.
Simon Rooney, CBRE’s head of retail capital markets Pacific, said: “Opportunities to acquire a 100% freehold interest in a market-leading regional shopping centre with management rights are rarely presented.”
Rooney said Fawkner Property secured two such opportunities. In September it jointly purchased Midlands Gate Perth with the Hong Kong-based PAG for about A$465m. Cairns Central was its second such purchase. This, said Rooney, demonstrated the investor’s strategic and counter-cyclical investment approach.