Hills Shire Council purchases Castle Mall Shopping Centre in Castle Hill for $105m

A Sydney council has finalised the purchase of a shopping centre for an eye-watering amount, beating a dozen other offers.

The Hills Shire Council has battled a dozen other potential buyers to secure a popular shopping centre in Sydney’s northwest for a massive $105 million.

Earlier this month, NewsLocal revealed The Hills Shire Council in Sydney’s northwest purchased the Castle Mall Shopping Centre at 4-16 Terminus St, Castle Hill last month.

The sale followed expression of interest by QIC — the Queensland Government-owned investment company behind Castle Towers.

Following a 21-day settlement period, QIC Real Estate managing director Michael O’Brien confirmed the sale of Castle Mall to council.

Mr O’Brien said the divestment of Castle Mall, located opposite Castle Towers, “was in

line with the client endorsed strategy”.

“At $105 million and a fully leased initial yield of approximately 4.1 per cent, the sale of this asset was a very pleasing result for our investors and QIC,” he told The Hills Shire Times.

“The property was highly sought after and resulted in a very competitive bidding response from about a dozen buyers, ranging from institutions, private investors, developers and syndicators.

“As an active real estate manager, QIC is always strategically re-assessing its holdings, seeking to position the Funds to capture optimal growth and return outcomes for our clients.

“QIC continues to be focused on activating its retail-anchored mixed-use town centre masterplan for Castle Towers — as Castle Mall does not form part of this masterplan,

it was surplus to our needs.”

At the time of the purchase, multiple sources told The Hills Shire Times the deal, approved by councillors in confidential meetings last month, would set ratepayers back “in the vicinity of $100 million”.

However, the move has been criticised by residents who are set to face a rate hike following council’s move to apply for a special rate variation through a change in the Local Government Cost Index Variation.

Councillors Frank De Masi, Virginia Ellis, Reena Jethi and Mayor Peter Gangemi tried to block the approval of the special variation in an extraordinary meeting of council on April 28.

Council reports show the application will increased council’s operating income by $8 million over ten years and “narrow the gap between (the) current rate peg and inflation”.

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Council officers said income from rates provides just 48 per cent of total income of the council.

Independent sources confirmed The Hills Shire Council, during negotiations for Castle Mall, sought the assessment of an international accounting firm to “turn around the valuation of the site in a very short period of time”.

“Due diligence was done to make a very informed decision,” the source said. “The previous owner, QIC, ensured its board could use a discretionary decision making process to reduce the likelihood of another major shopping centre company purchasing the site.

“I can tell you the sale was turned around by both parties very quickly.”

A source close to the situation said the purchase by council “could change the entire face of Castle Hill”.

“Council now control the medical centre at Terminus St, the carpark and Castle Mall,” the source said. “Council can control the vision for the site and block the advances of private properties from developing monstrosities at the heart of the shire.”

Residents, already aware of the purchase, questioned the timing.

“Why is it that council has $100 million to spend on buying a private shopping centre, all while the approve to increase our rates through a special rate variation?” one resident told The Hills Shire Times.

“If it is in the financial situation to buy a shopping centre, it shouldn’t need to reach further into residents pockets.”

The mixed-use site at Terminus St includes businesses such as TK Maxx, Tong Li IGA express, Castle Hill Medical Centre, 4 mini-majors and 35 specialty shops across 9,652 sqm.

Real Estate listings for the site suggested Castle Mall was “under-utilised with significant development potential” with neighbouring 68 metre height limits.