Centuria swoops on Halls Head for $70m

Real estate funds manager Centuria Capital is backing the recovery of the retail sector and has snapped up Halls Head Central in WA for about $70m.

Centuria Capital has bought Halls Head Central in WA for about $70m.

Real estate funds manager Centuria Capital is backing the recovery of the retail sector and has snapped up Halls Head Central in WA from property heavyweight Vicinity Centres and super fund backed ISPT for about $70m.

The move adds to the $3.2bn worth of retail assets Centuria has under management and comes as the retail property market undergoes a major reset in values.

Shopping centres ranging from large Westfield-run malls to small neighbourhood complexes have been selling at a relatively fast pace this year with investors swooping as they hunt for bargains.

Investors including IP Generation, Fawkner and Haben have led the pack in chasing deals but larger players including HMC and Charter Hall are also bidding on assets.

CBRE’s Simon Rooney and James Douglas handled the latest off-market sale, which continues a run of transactions in WA.

“The transaction demonstrates continued demand, particularly by private capital for subregional assets with a focus on non-discretionary spending, particularly those which offer strategic value-add opportunities,” Mr Rooney said.

“In the case of Halls Head, the asset’s location at the core of the Halls Head activity centre, significant capital investment works completed in 2016, together with future strategic value-add potential, were key investor draw cards.”

WA is gaining traction as a key retail investment destination, with total transaction levels jumping, with big deals trades including Midland Gate ($465m), Rockingham Shopping Centre ($180m), Dianella Plaza ($76.25m) and Southlands Boulevard ($92.5m).

The 19,373sq m subregional shopping centre at Halls Head is anchored by supermarkets Coles and Aldi, as well as discount department store Kmart. These are also two mini-majors, 50 speciality shops and two freestanding pad sites.

In total, 64 per cent of gross income is generated from non-discretionary tenants and the property attracts 2.4 customer visits annually. It has a 3.3-year weighted average lease expiry and is fully occupied.

The centre, on Old Coast Road, sits on nine hectares and its low site coverage of 22 per cent gives Centuria potential development or land banking opportunities across about 10,000sq m of surplus land.

Centuria said the counter-cyclical retail asset was secured at about 40 per cent, below its independently assessed replacement cost.

“Hall Head Central provides a compelling, counter-cyclical investment opportunity,” Centuria Joint CEO Jason Huljich said. He said the centre in WA’s second largest city, Mandurah, had a high proportion of non-discretionary retailers and there was the potential for tenant remixing or a redevelopment.

“WA remains a standout state for retail property,” he said, noting the low forecast retail supply and vacancy levels, which are boosting the performance of centres across WA.

The centre will be placed in a single-asset, closed-ended wholesale fund named Centuria Halls Head Central Fund.

Centuria head of retail, Bruce McCully, said the complex was the group’s third retail asset in Mandurah. Centuria also runs the Erskine Shopping Centre and Mandurah Greenfields Shopping Centre.

“With limited new supply of retail assets, due to construction supply pressures, coupled with a strong population growth, we believe tenant demand will continue to outstrip supply for well-maintained subregional shopping destinations across Western Australia,” he said.

The fund is seeking to raise $41.3m from wholesale investors.