Why Haben expects a Townsville mall to deliver an 8.5pc return
Private property fund manager Haben has bought the remaining half stake in the Stockland Townsville shopping centre to take full control of the mall, confident it can generate an 8.5 per cent income return as the surrounding population grows.
Haben on Tuesday announced it bought Stockland’s half stake of the mall, along with valuable management rights, for $123.5 million – at a 9.5 per cent discount to its June book valuation – to gain a 100 per cent ownership. That deal follows Haben’s initial acquisition of Dexus’ half stake in the mall for $115 million in September, a price that represented an 11.5 per cent discount.
Stockland Townsville is now fully owned by Haben.
Both half-stakes in the asset were sold on a yield of about 8 per cent, for a $238.5 million total. This compares to Stockland Townsville’s peak valuation of over $400 million in 2017. Haben will also acquire two development sites that sit next to the mall.
The asset will be held in a Haben-run fund, which is expected to throw off an average distribution yield of 8.5 per cent, according to industry sources.
Haben was bullish about the acquisition. Its confidence is underpinned by expectations of strong population growth in Townsville, a major hub for the army.
“We have been attracted to Townsville due to its robust and diverse economy underpinned by the federal government’s commitment to relocate a significant portion of the military to the region,” Haben managing director Ben Finger said.
The Townsville deal – it was brokered by JLL’s Nick Willis and Sam Hatcher – is the latest in a series of regional mall trades, which are changing hands on near-8 per cent yields in the lead-up to Christmas. Other deals include Fawkner buying Settlement City on a yield of 7.77 per cent. Fawkner is also in due diligence talks to acquire Cairns Central on a yield of about 8 per cent.
Rosebud Plaza which has undergone a $30 million redevelopment, sold for $134.5 million on a yield of about 6 per cent.
Also divesting retail assets is ASX-listed Charter Hall Retail REIT, which on Tuesday said it had signed contracts to sell two of its malls, Rosebud Plaza on Victoria’s Mornington Peninsula and Southgate Square in Adelaide for a combined $225.5 million.
Highlighting the strength in demand for smaller malls anchored by supermarkets and non-discretionary tenants, both properties sold in line with their June 2023 book values.
Rosebud Plaza, which has undergone a $30 million redevelopment including adding a new Woolworths to an existing Coles and Kmart, sold for $134.5 million on a yield of about 6 per cent.
Southgate Square in Morphett Vale, which includes a Coles, Target and Aldi, sold for $91 million on a yield of about 5.75 per cent.
Both were acquired by private high net worth investors following unsolicited off-market offers. A JLL team consisting of Mr Willis, Mr Hatcher and Stuart Taylor negotiated the sale of Rosebud Plaza. The divestments, which will settle in February (Southgate) and June (Rosebud) next year, will reduce CQR’s gearing to 25 per cent from 29 per cent.
Charter Hall Retail chief executive Ben Ellis said the divestments were part of CQR’s “ongoing active asset management and focus on improving portfolio quality while maintaining balance sheet strength”.
The trust reaffirmed its full-year operating earnings guidance of 27.4 cents per unit, of which 90-95 per cent will be paid out in distributions to unitholders.
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