Centennial unites with Parkstone for retail play

Property funds house Centennial has teamed up with boutique manager Parkstone to set up a venture which has ambitions to buy $1bn worth of shopping centres.

Bundaberg’s largest shopping centre, Hinkler Central, was bought for for $107m.

Property funds house Centennial has teamed up with boutique manager Parkstone to set up a venture which has ambitions to buy $1bn worth of shopping centres.

Shopping centre trading has jumped partly on the back of good operational performance, in the face of the squeeze on consumers, but also as values have been reset.

This has already attracted managers into the area, with fund houses Haben, Fawkner and IP Generation buying a series of malls which have been offloaded at a discount by large institutions.

The latest player to enter the field is Scentre, owner of the local Westfield empire, which has teamed with investment bank Barrenjoey to make a surprise $298m play for a half interest in Adelaide’s second largest mall.

They teamed up to launch a fund that will take a 50 per cent stake in Westfield Tea Tree Plaza, effectively derailing a transaction which would have resulted in the acquisitive funds group IP Generation purchasing the stake in the mall.

The Centennial tie-up with Parkstone comes out of their purchase of Bundaberg’s largest shopping centre, Hinkler Central, for $107m. They bought the asset together from the Queensland government’s investment arm QIC, and now want to grow more in the regional and large format retail sectors.

Centennial has acquired an equity interest in Parkstone with the right to increase over time, plus board representation, bolstering the manager, once mainly known for its industrial and office plays

Parkstone has about $240m in funds under management across six neighbourhood supermarket anchored centres in SA and regional NSW, while Centennial’s portfolio of funds under management is now nudging $2.1bn. It has about 85 assets spread across last mile industrial and logistics, offices and boutique residential property.

The retail sector was hardest hit during the coronavirus crisis and is now beginning to see a resurgence in the demand for dominant centres offering healthy yields for investors.

Centennial executive director Paul Ford, said the group had formed a strategic partnership with Parkstone and flagged more shopping centre deals. “This is the first of what we anticipate will be a broader partnership that will position us as a major player at scale in this space,” he said.

The move also allows Parkstone to tap into Centennial’s funds management experience and established investment platform, while Centennial benefits from Parkstone’s expertise in the retail property sector.

Parkstone Funds Management managing director Tim Wilkin highlighted the value in the sector. “The resilience and attractiveness of subregional shopping centres adds a further level of optimism to our regional investment strategy,” he said.

The Hinkler transaction was handled by Sam Hatcher and Jacob Swan of JLL.