Centuria expands retail portfolio with $70m acquisition of Halls Head Central in WA

Centuria Capital Group (ASX: CNI) has acquired Halls Head Central, a subregional shopping centre in Western Australia, for approximately $70 million, expanding its retail assets under management to $3.2 billion.

The 19,373 sqm centre, located in Mandurah, is anchored by supermarkets Coles and ALDI, as well as discount department store Kmart, and features two mini-majors, 50 specialty shops, and two freestanding pad sites.

Non-discretionary tenants generate 64% of the centre’s gross income, and the asset attracts 2.4 million customer visits annually.

Halls Head Central boasts a 3.3-year WALE (Weighted Average Lease Expiry) and 100% occupancy, supported by a 12-month rental guarantee from the vendor on vacant tenancies at settlement.

The counter-cyclical retail asset was secured at approximately 40% below its independently assessed replacement cost, according to Centuria.

Jason Huljich, Centuria Joint CEO, said, “Hall Head Central provides a compelling, counter-cyclical investment opportunity within WA’s second largest city, Mandurah. The centre benefits from a high proportion of non-discretionary retailers while presenting value-add opportunities through tenant remixing or potential redevelopment.”

Greater Perth’s population has increased by 3.6% over the past 12 months, and coupled with low forecast retail supply and vacancy, it provides compelling fundamentals for the retail sector in Western Australia, Huljich added.

The acquisition will underpin a single-asset, closed-ended wholesale fund named Centuria Halls Head Central Fund, which is expected to be offered to wholesale investors from Monday, 20 May 2024.

The fund has a forecast starting annual distribution of 8.0% paid monthly and a target 13.5% IRR (Internal Rate of Return).

Bruce McCully, Centuria Head of Retail, said, “Halls Head Central is now our third retail asset within the City of Mandurah. Centuria has deep market experience within the region, actively managing the Erskine Shopping Centre and Mandurah Greenfields Shopping Centre.”

The asset’s high-profile position along Old Coast Road, the central arterial roadway connecting regional hubs Rockingham and Bunbury, exposes it to 40,500 vehicles passing the centre each day (14.7 million annually).

Settlement of the acquisition is anticipated in July 2024, with CBRE’s Simon Rooney and James Douglas appointed as sales agents for the transaction.