Vicinity eyes Melbourne site for next big DFO complex
Find out where Melbourne’s next major factory outlet could get underway.
Business
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Retail property heavyweight Vicinity Centres is capitalising on the sell down of assets by Elanor Investors Group and is targeting the purchase of a shopping centre in Melbourne for about $180m.
The company is in talks to buy Waverley Gardens in the city’s southeast suburbs and could capitalise on the area’s strong growth by converting some parts of the complex into a discount factory outlet.
The move to sell the centre came well before Elanor’s suspension from the Australian Stock Exchange in 2024 and its decision to liquidate its flagship hotel fund, including properties such as Peppers Cradle Mountain Lodge.
Vicinity is moving to acquire the centre from an Elanor partnership backed by US manager Heitman and could look to one of its high-performing DFOs as it looks to develop a more permanent replacement for its complex in the Melbourne suburb of Moorabbin which sits on leasehold land. The triple-supermarket anchored subregional shopping centre sits on a 10.62ha parcel and attracted bidding from traditional shopping centre players and those seeking an alternative use due to its prominent position along the Monash Freeway.
It has a weighting towards non-discretionary, services and food tenants and is well suited to repositioning. It is anchored by three supermarket operators – Woolworths, Coles and Aldi and a Big W – along with 10 mini-majors, 105 specialities and kiosks, pad-sites and offices.
The Waverley Gardens Partnership, an unlisted joint venture between Heitman and Elanor, acquired the complex from US giant Blackstone in 2018 for $178m.
The fund manager undertook a $24m repositioning of the former Target discount department store, repurposing the asset by relocating ALDI, and putting in Henry Mercato, TK Maxx, and fresh food and health services precincts.
The deal is being brokered by CBRE agent Simon Rooney, who was unavailable to comment, and the parties declined to comment.
JLL and Stonebridge had run a sales campaign in 2023.
The centre is one of just 10 subregional centres in Melbourne on a land parcel of more than 10ha.
Vicinity has been bolstering the quality of its portfolio by selling off smaller centres and snapping up larger assets and undertaking redevelopments, such as Sydney’s Chatswood Chase. Vicinity has sold off about $457m of assets over the most recent period and poured funds into larger plays. Analysts have backed the strategy as it is expected to lead to more resilient and higher income over time.
The company turned in strong results last month, with its factory outlets performing well. The company’s DFO complexes have been built up to become the top outlet shopping brand and evolved to focus on a premium and international brand offer as well as sports and athleisure categories.
Vicinity has added to its portfolio with the greenfield development of DFO Perth and buying into Uni Hill Factory Outlets in Bundoora in Melbourne’s north and rebranding the complex.
Originally published as Vicinity eyes Melbourne site for next big DFO complex
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