Malls back in vogue with $2.2bn deal for Pacific Fair and Macquarie Centre

Super heavyweights UniSuper and Cbus Property are making a $2.2bn investment in the Gold Coast’s Pacific Fair and Sydney’s Macquarie Centre.

UniSuper and Cbus Property have taken the majority ownership of Pacific Fair in Queensland, and 50 per cent ownership of Macquarie Centre in Sydney.

Superannuation heavyweights UniSuper and Cbus Property have signalled that malls are back in vogue with a deal to make a $2.2bn investment in the Gold Coast’s Pacific Fair and Sydney’s Macquarie Centre.

The transaction is Australia’s largest ever shopping centre deal and shows that big retail centres are again trading and have avoided dramatic value falls as shoppers return with lockdowns being lifted.

AMP Capital unveiled the pair as new partners in the unlisted AMP Capital Retail Trust, which owns the bulk of the Gold Coast centre and a half interest in the Sydney landmark.

UniSuper, one of Australia’s leading superannuation funds and Cbus Property, one of the country’s biggest property investors and developers, have taken the majority ownership of Pacific Fair in Queensland, and 50 per cent ownership of Macquarie Centre in NSW.

The $2.2bn investment reflects the new partners’ positive outlook and renewed momentum in the retail sector, and in particular, the quality of ACRT’s underlying assets, with both shopping centres managed and developed by AMP Capital for more than 30 years.

The deal is not only the largest retail transaction in Australian history, it is also one of the largest global retail transactions since 2018, in a sign that capital is back after the coronavirus crisis.

While the pricing is yet to be revealed it will show a drop from the peaks during the boom era of malls but also that they have not plunged unexpectedly.

The deal was handled by the AMP Capital Real Estate team in conjunction with the vendors’ advisers Colliers’ head of retail investment services, Lachlan MacGillivray, as well as Morgan Stanley’s chairman of investment banking, Australia, Tim Church and head of real estate, Australia, Craig Smith.

AMP Capital head of real estate, Kylie O’Connor, said the company was working with UniSuper and Cbus Property as manager of the assets.

Since 2012, AMP Capital has overseen the redevelopment of the assets on behalf of investors to enhance the retail offering and trade area dominance of Pacific Fair and Macquarie Centre.

She flagged the significance of the deal for the planned $200bn demerger of AMP Capital’s planned spin off.

“As we move closer to operating under the demerged private markets business, we look forward to working with our partners to unlock future opportunities at each asset, both of which are in prime locations within exceptional trade areas. This includes further strengthening performance with innovative retail solutions and capitalising on their mixed-use potential, including Macquarie Centre’s mixed-use development application,“ she said.

Despite the tremors the coronavirus crisis has sent through the sector she said that the best malls were attracting capital.

“This deal demonstrates the returning confidence investors have in the retail sector, particularly for high-quality, well managed assets, and the support for our highly regarded and talented management platform,” Ms O’Connor said.

UniSuper head of property and infrastructure, Kent Robbins, said the group was backing quality retail assets.

“We anticipate an increase in returns from certain shopping centres as retailers seek exposure to dominant shopping centres, such as Macquarie Centre and Pacific Fair, to leverage their omni-channel retail plans,” he said.

“We look forward to our partnership with Cbus Property and AMP Capital to maximise the potential of the assets, including the mixed-use development opportunities for both centres, to deliver greater retirement outcomes for our members,” Mr Robbins said.

Cbus Property chief executive Adrian Pozzo said the company was excited to partner with UniSuper and AMP Capital on these premium flagship retail assets located in prime locations, noting the potential for future growth opportunities in both centres.

“This blue-chip retail portfolio complements Cbus Property’s existing premium commercial office portfolio,“ Mr Pozzo said.