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The $315m deal that exemplifies retail’s strength

By Juliet Helmke
03 July 2024 | 12 minute read
stockland glendale reb yunggx

The largest retail transaction for 2024 so far has just settled in Newcastle’s western suburbs.

Fund manager IP Generation has acquired major shopping centre Stockland Glendale for $315 million, making it the largest subregional sale in NSW in the past 18 years and illustrating the sustained strength of the sector.

The 19-hectare supercentre was the first of its kind when it was developed in 1996, combining retail, leisure and entertainment in an open-air concept design. In 2024, it continues to be anchored by Kmart, Target, Coles, Woolworths and Event Cinemas, complemented by 10 drawcard mini-majors including TK Maxx, Rebel Sport and JB Hi-Fi, and 66 specialty and kiosk retailers. Annual sales reached $366 million in February 2024, and the centre boasts a sales productivity of $10,553 per square metre.

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With such strong fundamentals, it has been tightly held, and in fact this is the first time it has been traded since opening, though the asset transferred into institutional ownership during the intervening period.

It’s typical of the assets that IP Generation has targeted in the last few years. With the firm stating that its mission is to identify opportunities offering “asymmetric returns i.e. where the upside return potential is judged to be greater than the downside risk”, the fund manager has been making big investments in regional mixed retail.

Purchasing the Coles- and Woolworths-anchored Corio Village in December 2019, the firm followed up with an investment in Mildura Central in March 2021. Other investments have included centres Westfield Helensvale and Bega, while a group of six supermarket-anchored subregional centres were collected together to form its Essential Retail Trust.

But finding assets that fit the bill has been no mean feat for the firm, and competition among the sector has become fierce as its stability has increasingly drawn interest.

“This is the centre’s first change of ownership in the 30 years since its development, which speaks to how rarely these types of assets are traded. The compelling forecast returns and IP Generation’s track record has underpinned strong demand for this opportunity from our stable of investors,” IP Generation CEO, Chris Lock, commented.

Lachlan MacGillivray, Colliers’ managing director of Asia-Pacific retail capital markets, said the sale was “a reflection of the incredible demand for assets that boast both scale and convenience, as well as a comprehensive offering of both discretionary and non-discretionary retailer categories”.

“Many large corporations and fund investors such as IP Generation, are increasingly interested in and buying into the retail sector. The confidence they have shown is a testament to the current strength of the retail investment market,” he said.

As the year rolls on, MacGillivray commented that the sector expects to see competition for retail elevated, particularly for drawcard sites outside of the major cities.

“The subregional sector continues to attract strong capital demand, fuelled by an appealing spread to the risk-free rate and borrowing costs. Private investors and syndicators looking for attractive income yields have emerged as the dominant players, providing an opportunity for institutional owners to recycle capital. We expect this trend to continue throughout the second half of 2024.”

ABOUT THE AUTHOR


Juliet Helmke

Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.

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