Whitmore Property launches $150m large format retail fund

Whitmore Property is tapping investors for a new $150m large format retail fund as it looks to capitalise on a booming population and housing pipeline.

The Noarlunga Centre property which is one of three seed assets earmarked for Whitmore Property’s new large format retail fund.

Adelaide fund manager Whitmore Property is tapping investors for a new $150m large format retail fund as it looks to capitalise on a booming population and housing pipeline that’s expected to fuel a surge in ‘lifestyle’ spending on household goods.

Whitmore is looking to raise an initial $30m for the fund, which has secured three seed assets in Adelaide, and is in talks for three prospective acquisitions in NSW and Queensland.

While institutional capital has retreated from big box retail in recent years, private investors and syndicators have stepped in, attracted to the large land-holdings on offer and leases to well known national furniture, hardware and lifestyle brands.

Whitmore Property director Lauren Price said the fund was exploring opportunities in both metropolitan and regional locations, with Western Australia and Queensland identified as target areas.

“We have sat on our hands for almost two years – we’ve sold a couple of assets but not acquired because we were struggling to see value in the market where we could really bring value to our investors,” she said.

Whitmore Property directors Lauren Price and Brad Price.

“We’ve been watching, researching and analysing and we’ve landed on large format retail. There’s a housing crisis which is forcing governments to do land releases and really get behind that residential development.

“The flow on from that is that people need paint, they need tiles, they need washing machines and they need what comes with these large format centres.

“Also, the asset class itself – they’re good, simple, big boxes. They’ve got long economic lives, minimal capital expenditure, they usually sit on really great big land parcels and you’re dealing with household names. You get a different level of sophistication in your tenant.”

Whitmore Property was established by Ms Price’s father Jeff Stevens in 2005, and has grown its portfolio to $250m in funds under management, with holdings across the commercial, industrial and retail segments, primarily in its home state of South Australia.

In an information memorandum sent to investors, the company describes large format retail as “the most attractive investment thematic in the market right now”, and is seeking at least $30m in the first fundraising stage, increasing to $80m as it looks to acquire a $150m portfolio over the next two years.

Close to $49m will be deployed on the three seed assets – in Seaford Meadows and Noarlunga Centre in Adelaide’s south, and Clare in South Australia’s Mid North – which are occupied by brands including Super Cheap Auto, National Tiles, The Good Guys and Forty Winks.

The fund is considering a further $70m outlay on three additional properties in Queensland and in regional NSW.

According to figures from Colliers, there’s been a notable increase in large format retail deals this year, with $352m worth of sales in the first seven months of the year, up 53 per cent on the same time last year.

However Ms Price said Whitmore would take a patient approach to future acquisitions.

“We think there’s more to go in the market,” she said.

“Interest rates are going to come off slower than everyone had originally anticipated, there’s a bit of pain to be felt.

“And so the two year acquisition window, we think, lets us keep a watch on the market, take advantage of opportunities as they come through, and fill the fund with the best assets.

“There’s plenty of fund managers out there who buy for fees, and that’s not us.”

The fund is targeting an initial distribution of 6.25 per cent, and an average seven-year distribution of 7.5 per cent.

The first stage fundraising is expected to close at the end of September.