Australian real estate funds manager, Centuria Capital Group, has made a significant acquisition by purchasing the Halls Head Central shopping centre for a remarkable price of $70 million. The deal appears to be a steal, as Centuria points to an independent assessment conducted by CBRE, revealing that the property was secured at approximately 40 per cent below its independently assessed replacement cost.
The addition of Halls Head Central to Centuria’s portfolio further strengthens its position in the retail property market, with the company now managing an impressive $3.2 billion in retail assets. The sale has also sparked speculation about potential onsite development opportunities, given that the current shopping centre occupies only 22 per cent of the expansive nine-hectare site, leaving an additional 10,000sqm of surplus land available for future growth.
Jason Huljich, joint chief executive of Centuria, expressed his enthusiasm for the acquisition, describing it as a compelling, counter-cyclical investment opportunity within Mandurah, Western Australia’s second-largest city. He highlighted the centre’s high proportion of non-discretionary retailers and the potential for value-add opportunities through tenant remixing or redevelopment.
Huljich also emphasized the strength of Western Australia’s retail property market, noting that Greater Perth’s population has grown by an impressive 3.6 per cent over the past 12 months. Coupled with low forecast retail supply and vacancy rates, these factors provide a compelling case for investing in the retail sector in the region.
The Halls Head Central shopping centre boasts an impressive array of amenities, including 50 specialty shops and two freestanding pad sites. The 19,373sqm mall is anchored by popular supermarkets Coles and ALDI, as well as the well-known discount department store Kmart. With ample parking for 960 cars, the centre attracts an astounding 2.4 million visitors annually, showcasing its popularity among local residents and visitors alike.
The shopping centre’s prime location is another key factor in its appeal. Situated along a 247-metre street frontage, the centre benefits from exposure to approximately 40,500 passing vehicles each day, equating to nearly 15 million cars per year. Its strategic position, just 75km south of Perth’s CBD, ensures easy accessibility for customers from the surrounding areas.
The property’s sales history is also noteworthy. It is understood that Halls Head Central last sold as part of a multi-deal package, which included other properties, for a total of $145 million in 2013. However, the last time the shopping centre was sold as a single entity was back in 2001, when it fetched $7 million, highlighting the significant growth in its value over the past two decades.
Bruce McCully, Centuria Head of Retail, expressed confidence in the acquisition, noting that Halls Head Central is now Centuria’s third-largest retail asset in Mandurah. The company already has a strong presence in the region, actively managing the Erskine Shopping Centre and Mandurah Greenfields Shopping Centre.
McCully attributed the strong tenant demand for well-maintained subregional shopping destinations across Western Australia to the limited new supply of retail assets, driven by construction supply pressures, and the region’s robust population growth. He believes that these factors will continue to support the retail property market in the area.
Centuria plans to offer the Halls Head Central Fund to wholesale investors starting from Monday, May 20. The fund will provide an initial five-year term and seeks to raise $41 million, with a minimum investment of $100,000. Investors can expect a forecast starting annual distribution of 8 per cent, paid monthly, with a target return of 13.5 per cent.
The settlement of the acquisition is expected to take place in July 2024, marking an exciting new chapter for the Halls Head Central shopping centre under Centuria’s ownership. CBRE’s Simon Rooney and James Douglas were the sales agents responsible for facilitating this landmark transaction.
As Centuria embarks on this new venture, the company remains optimistic about the future prospects of the Halls Head Central shopping centre and its potential to generate significant value for both the local community and investors alike. With its strategic location, diverse tenant mix, and ample opportunities for growth and development, the shopping centre is well-positioned to thrive in the dynamic retail landscape of Western Australia.