Woolworths has sold a portfolio of supermarket properties but will remain in place as operator. Photographer: Ian Waldie/Bloomberg via Getty Images
Supermarket giant the Woolworths Group has finalised a deal to sell a prime portfolio of ten neighbourhood shopping centres with a total value of more than $500m to Asian investment group, Forest Endeavour.
The move was slightly larger than when flagged by The Australian last month, as it will see Forest Endeavour buy a mix of centres, some of which already trading and others of which remain under development.
Shopping centres along the eastern seaboard are in high demand, with both public and private investors seeking the income certainty they offer in volatile times, even as other property sectors come under pressure.
Buyers of supermarket anchored assets have ranged from Charter Hall, which is stocking up for its $3bn convenience retail fund, to HMC Capital, which has bought in Sydney and Melbourne.
Forest Endeavour, which is backed by a family of Taiwanese billionaires, has separately expanded its retail and hospitality holdings in Queensland with the $370m purchase of the Paradise Centre and the Novotel hotel in Surfers Paradise.
Buying the Woolworths portfolio shows that deep-pocketed Asian investors are also chasing exposure to the safety of the sector.
CBRE senior retail executives James Douglas, Joe Tynan and Michael Hedger brokered the transaction.
The deal seals Forest Endeavour’s position as a major investor in Australia’s neighbourhood shopping centre sector. Picture: Asanka Ratnayake/Getty Images
The deal sets up Forest Endeavour as a major player in Australia’s sought after neighbourhood shopping centre sector, giving it the chance to consolidate more assets in the still fragmented area.
CBRE’s Mr Douglas said the transaction provided a highly beneficial outcome for both parties. “It crystallises and returns development proceeds for Woolworths, while delivering Forest Endeavour ten new, high quality assets offering growth potential in the one transaction,” he said.
The Woolworths-anchored assets are mainly located in metropolitan and key satellite city locations ranging from Queensland to Tasmania. Woolworths director, property development, Andrew Loveday, indicated that the company had capitalised on demand for supermarket assets.
“We build and develop high-quality retail destinations that bring communities together and we’re pleased to have leveraged this unique opportunity,” he said.
The portfolio has a mix of open assets such as Kiama Fair, in southern NSW, Doolandella in Queensland, soon-to-be-completed assets in Marsden Park and Austral, in Sydney, and assets under development in Chelsea Heights in Victoria and Belmont in Newcastle.
When fully developed the portfolio will have a total lettable area of more than 50,000sq m.
CBRE’s Mr Tynan noted the supermarkets were performing well.
“The performance of the completed supermarkets is exceptional and the forecast sales of the centres under development will see them deliver meaningful sales in their respective catchments when opened and provide Forest Endeavour with resilient and growing returns in the future, with next to no capital leakage given the newly constructed nature of the assets,” he said.