Cairns Central wins interest as shops back in vogue as McConaghy Properties takes aim

Retail property assets are trading again, but values are under pressure.

Lendlease has won strong interest in the massive Cairns Central complex as buyers return to the retail property market, with a deal worth more than $430m likely to reset the regional shopping centre market.

The group’s flagship unlisted retail property fund put the asset on the block earlier this year and has now won interest from Queensland real estate group McConaghy Properties.

That company has a portfolio of six everyday retail community focused shopping centres which are anchored by highly productive supermarket and discount department store tenants.

The private group’s holdings span well-known assets including Castletown, Kingaroy Shoppingworld, Lismore Shopping Square, Westlands Plaza, Toowoomba Plaza and The Ridge.

A move on Cairns Central may suit the Queensland-based firm, which in 2021 launched its first Retail Property Fund, McConaghy Retail Property Fund.

The group flagged that the launch of the new funds management platform underpinned its long term growth strategy, and it aims to leverage the skills and experience in retail property.

The Lendlease-run fund has been looking to offload Cairns Central at a time when large mall trusts are under pressure from investors wanting to redeem at a time, but some buyers are now back in the market.

Cairns Central is the largest collection of retail shops and eateries in the city. Picture: Brendan Radke

The Lendlease fund has already sold down a series of shopping centres. It offloaded Caneland Central in Mackay, Queensland, to Sentinel Property Group for about $280m last year. It also sold Craigieburn Central, north of Melbourne, to funds house IP Generation for about $300m.

Colliers’ Lachlan MacGillivray and McVay Real Estate’s Sam McVay marketed Cairns Central for the Lendlease managed Australian Prime Property Fund Retail but declined to comment, as did the parties.

Cairns Central is anchored by a Myer, Kmart, Target, Coles, Woolworths and Event Cinemas. The complex is a lifestyle, entertainment and fashion destination and is one of the country’s top performers with sales of $492m per annum.

The centre has a GLA of 51,972sq m and occupies a landmark 9.4ha site, directly connected to Cairns Railway station. As well as major tenants, other retailers include City Beach, Daiso, iPlay Australia, Rebel, Best & Less, Terry White Chemmart and JB Hi-Fi.

If a trade goes through, it will be a rare full interest in a regional shopping centre with management rights to change hands, with only two sales recorded since 2015.

Credit ratings agency S&P Global in December downgraded the unlisted Lendlease fund on the back of concerns that sagging consumer confidence, as a result of belt tightening by consumers, would weigh this year.

The fund saw its long-term issuer credit rating cut to “BBB+” from “A-” over it selling assets to satisfy unitholder redemptions – rather than cut debt – and take on a cumulative loss of income-generating properties.

Originally published as Cairns Central wins interest as shops back in vogue as McConaghy Properties takes aim