Barrenjoey, Scentre Group establish jointly managed fund

Barrenjoey Private Capital and Scentre Group have established a jointly managed fund to purchase a 50% stake in Adelaide's Westfield Tea Tree Plaza and the adjoining Tea Tree Plus for $308 million.

CBRE head of retail capital markets - pacific, Simon Rooney negotiated the deal on behalf of a Dexus managed fund.

Scentre and Barrenjoey have stepped into the Westfield Tea Tree transaction under a preemptive agreement, marking their first foray into funds management.

The Tea Tree Plaza deal represents South Australia's largest regional shopping centre transaction since November 2019, when Paragon REIT and MA Financial took out a 50% stake in Westfield Marion for $670 million from the Lendlease-managed Australian Prime Property Fund Retail.

"The opportunity to acquire a 50% stake in a dominant and strong performing regional shopping centre in Adelaide's affluent north-eastern suburbs garnered both domestic and offshore investor interest," Rooney said.

"This interest was underpinned by the centre's genuine value-add potential, robust investment fundamentals, South Australia's stamp duty exception and attractive retail yield spread relative to Sydney and Melbourne.

"Active, well capitalised investors are opportunistically acquiring the best quality fortress malls, which are historically rarely traded and offer exceptional investment fundamentals."

Rooney said the window of opportunity was "beginning to close", with more investors looking to come back into the retail sector as interest rate volatility stabilises.

Tea Tree Plaza has a total gross lettable area of 101,052sqm and is anchored by Myer, Big W, Kmart, Target, and Harris Scarfe alongside a triple supermarket offering in Coles, Woolworths and Aldi, nine mini-majors and approximately 201 specialty stores.

The centre also includes a dining and entertainment precinct, offering 10 restaurants and a Hoyts cinema complex, forming part of the most recent redevelopment of the centre in 2018. An additional $40 million in upgrade works are set to be completed in the first half of this year.

The centre draws 10.8 million customers annually and currently caters to a significant trade area population of over 440,253 residents, which is forecast to reach 487,795 residents by 2041.