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Sydney-based funds manager Centennial has taken an equity interest in Adelaide’s Parkstone Funds Management in the wake of a partnership forged earlier this year for the $107 million acquisition of a Bundaberg shopping centre.
Centennial, which manages 85 property assets totalling $2.1 billion, says the move is aimed at targeting more regional and large-format retail properties nationally with the aim of capitalising on a resurgence in demand for the assets.
While the level of investment in Parkstone has not been disclosed, Centennial says the equity stake gives it board representation and leaves the door open for the group to potentially increase its interest further in Parkstone.
The boutique fund managers acquired Hinkler Central shopping centre, the largest retail centre in Bundaberg, from Queensland Investment Corporation (QIC) in a deal that settled at the end of last month.
The yield-driven acquisition was anticipated to be the first of many planned by the newly formed strategic partnership.
Parkstone Funds Management is a relative minnow in the field, with $240 million in funds under management across six neighbourhood supermarket-anchored centres in South Australia and regional NSW, while Centennial’s portfolio includes industrial, logistics, commercial and boutique residential properties.
The acquisition of Hinkler Central is aimed at leveraging a “resurgence in the demand for dominant centres offering healthy yields for investors”, says Centennial.
Hinkler has been described as one of Australia’s top 10 retail properties in its class in terms of gross lettable area and moving annual turnover, with the partners also noting the property’s potential for further expansion.
“This is the first of what we anticipate will be a broader partnership that will position us as a major player at scale in this space,” says Centennial’s executive director Paul Ford.
The partnership provides Parkstone access to Centennial's extensive funds management experience, while Centennial is leveraging Parkstone's specialist expertise in the retail property sector.
The Hinkler Centre acquisition, which is said to have been secured at 30 per cent below replacement cost, was an off-market deal negotiated Sam Hatcher and Jacob Swan, of JLL.
Business News Australia has sought further comment from the fund managers on whether they are currently eyeing other potential acquisitions. The partners have previously said they are looking to capitalise on off-market opportunities with “similar characteristics” to the Bundaberg deal.
The 21,000sqm Hinkler Central, anchored by Woolworths, Kmart and Coles, is located in Maryborough Street on the edge of Bundaberg’s CBD and is supported by 65 retail and dining outlets.
"The acquisition of the Hinkler Central Shopping Centre significantly bolsters our group’s exposure to sub-regional centres while further enhancing our portfolio’s overall quality and diversification,” says Parkstone’s managing director Tim Wilkin.
“We consider it an excellent yield and growth play because of the high barriers to entry in this market, being acquired approximately 30 per cent below replacement cost. There also exists further opportunity to enhance the centre in terms of development along with the ability to access positive rental reversion.
“The resilience and attractiveness of sub-regional shopping centres adds a further level of optimism to our regional investment strategy. Centres of this quality serve as important community hubs and have demonstrated proven resilience through some challenging times in recent years. We look forward to delivering continued growth for this asset.”
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