Parkstone grows portfolio of retail centres

Adelaide-based property fund manager Parkstone has boosted its shopping centre portfolio as it hunts for more acquisitions across the country.

Parkstone Funds Management managing director Tim Wilkin outside Drakes Semaphore.

Boutique property fund manager Parkstone has ­boosted its portfolio to almost $70m with its $12.5m acquisition of a Drakes-anchored shopping centre in Semaphore.

The Adelaide-based property group, which was established in late 2018 and made its first acquisition on the eve of the Covid-19 pandemic, has since acquired a number of ­regional and suburban shopping centres in South Australian and NSW.

Its most recent purchase at Semaphore settled last month in an off-market deal reflecting a forecast annual cash yield to investors of close to 6.9 per cent. The deal was brokered by CBRE.

Drakes has occupied the Semaphore site since 2000, and shares it with specialty shops including The Burger Lord.

Parkstone plans to invest in a revamp of the property, ­including facade and balcony upgrades, to improve specialty income. It is also investigating mixed-use development ­opportunities for the 3936sq m site.

Other properties in its portfolio include the newly built Total Tools premises in Mount Barker and two properties in regional NSW – the Riverdale Shopping Centre, in Dubbo, and a stand-alone Woolworths supermarket in Orange.

Parkstone managing director Tim Wilkin said regional retail centres were currently outperforming neighbourhood centres and CBD shops, and that was influencing Parkstone’s investment strategy.

“In terms of our acquisition philosophy, it’s not a matter of where we invest or who invests – but rather what we invest in,” Mr Wilkin said.

“Our focus is on regional and neighbourhood centres where there’s some development upside as well – now so more than previously that’s ­become more of a focus.

“We’ve seen yields tighten significantly over the past six months to the point where I can’t see much more yield compression.

“As it’s worked out, the performance of the asset class that we’ve been looking at – ­supermarket-anchored ­regional centres – throughout Covid, has been terrific.”

Mr Wilkin said the “sweet spot” for Parkstone was properties valued at $15m to $30m, and it was currently ­assessing several investment opportunities.

“We’re looking at close to $50m in acquisitions potentially between now and Christmas – there’s a few things we’re in due diligence and working on,” he said.

Parkstone is led by Jarrad Dunn, a co-founder of ­accounting firm Oreon Partners, Daycorp director Christopher Day and Mr Wilkin, who has more than 25 years of experience in the property ­industry, including a decade in the property arms of Woolworths and Wesfarmers.

Mr Wilkin said Parkstone’s investors were largely South Australian, but that the fund was also attracting ­interest from interstate groups.

He said new property-­focused investment funds were popping up in response to heightened demand from ­investors.

“I think it’s a product of a couple of things including that investors are becoming more educated and realising there are better opportunities out there rather than leaving your money in the bank,” he said.