Listed Singaporean player Starhill Global REIT has expanded its Australian presence and acquired the Myer Centre Adelaide, in the biggest retail deal of the year so far, for $288 million.
The centre is Adelaide’s largest shopping centre and the deal is the second-largest retail transaction for South Australia after the sale of a 50 per cent share in Westfield Marion in 2003 for $323 million.
Starhill has a portfolio spanning Australia, China, Japan, Malaysia and Singapore of mainly retail assets worth $2.4 billion. Australia increases to representing nearly a quarter of its gross revenue following the Myer Centre acquisition.
Ho Sing, chief executive of YTL Starhill Global, the manager of the $1.7 billion Starhill Global REIT, said he was pleased to have bolstered the group’s Australian footprint.
“This asset fits our investment strategy of building a quality portfolio of properties in prime locations,” he said.
“At the purchase price of $288 million, Myer Centre Adelaide provides an attractive yield of 6.6 per cent , is 2.8 per cent accretive to our DPU [distribution per unit] and is below the current replacement cost.”
The Myer Centre transaction follows on from YTL Starhill’s previous Australian investment activity, acquiring David Jones and the Savoy Hotel in the Perth CBD for $114.5 million in 2009, and more recently, the Marriott Hotel Portfolio for $415 million in 2012.
Simon Rooney of JLL brokered the deal on behalf of vendor, Novion Property’s flagship wholesale fund.
“Buyers were attracted to this landmark retail and office mixed-use asset, due to its iconic and absolute core location, new long-term lease to the anchor tenant, Myer, and the significant value-add potential, with the ability to accommodate new, major, domestic and offshore retailers,” Mr Rooney said.
“Offshore investors accounted for 15 per cent of the buyers in 2014, which is only slightly above the long-term average (12 per cent), but this largely reflects the shortage of assets of significant scale that are available for purchase by these major offshore institutions.”
Located in Rundle Mall, the Myer Centre Adelaide comprises over 60,000 square metres of retail space and 10,000 square metres of offices. It is anchored by a newly refurbished Myer store and the overall centre had a $35 million upgrade in 2013 and 2014.
The acquisition is expected to be completed by June 30, subject to the approval of the Foreign Investment Review Board.