JY Group snaps up Warriewood Square stake as it shoots for $3bn retail empire

The company is rapidly putting its stamp on the local property sector with a series of mall purchases.

JY Group has bought a 50 per cent stake in Warriewood Square on Sydney’s Northern Beaches for $135.5m as the sector’s recovery picks up pace.

Asian-backed property player JY Group has continued its retail buying spree around Australia, snapping up a half stake in Warriewood Square on Sydney’s Northern Beaches for $135.5m as the sector’s recovery picks up pace.

The 50 per cent interest in the shopping centres was sold by superannuation fund-backed manager ISPT, which is one of the large institutions that have been selling down assets as they rebalance their portfolios and meet investor redemptions.

JY has been capitalising on the desire of major institutions to sell off unwanted retail assets and has being buying ahead of the return of larger players to the sector. It has built up an empire of close to $3bn worth of retail property assets around Australia by buying both passive investment stakes and full interests in shopping centres.

ISPT Core Fund put its 50 per cent stake in Warriewood Square, a dominant subregional shopping centre, after a strategic portfolio review and it has also been selling other commercial assets.

CBRE’s Simon Rooney handled the on-market sale process for the 30,344sq m centre, which is co-owned and managed by the listed Vicinity Centres. The centre is anchored by national retailers Woolworths, Coles, Aldi and Kmart, and has a leading major tenant weighted average lease by income of 11. 1 years.

There are four mini majors, including Rebel, Cotton On Mega and JB Hi-Fi, alongside 97 specialty stores and kiosks, with the centre’s annual sales running at more than $135m.

Mr Rooney said the ISPT offering had attracted competitive interest, primarily from private based capital, given the centre’s prime metropolitan Sydney location, recent capital investment works of $85m completed in 2016, together with the robust performance of the major tenants.

“This strong transaction result reinforces increasing investor demand and liquidity for well-located, high quality metropolitan subregional assets demonstrating outstanding trading performance, underpinned by exceptional investment fundamentals and a secure tenancy profile such as that offered at Warriewood Square,” Mr Rooney said.

He said the Warriewood transaction completed a series of about $1.3bn worth of partial 50 per cent mall stakes changing hands since June. The deals include stakes in Westfield West Lakes and Westfield Tea Tree, both of which are in SA, trading. Investors have also swooped on WA assets with interests in Claremont Quarter, Lakeside Joondalup and Westfield Whitford City changing hands.

The centre sits 29km northeast of the Sydney CBD and the 2016 redevelopment introduced the Aldi supermarket, additional mini-majors and a new multistorey car park. It serves an established and affluent trade area of 177,918 residents.

JY Group last month finalised its acquisition of a 50 per cent stake in Westfield Whitford City in a $195m play in a sign of the depth in the super subregional shopping centre market and it had earlier bought Melbourne’s Roxburgh Village.