Lendlease offloads centre for $136m to DeGroup

Private investor Colin DeLutis’ DeGroup has added to its growing shopping centre portfolio after buying Lendlease’s Caroline Springs mall in a $136.5 million deal.

The purchase of CS Square, a 25,308 square metre hub with three supermarkets and discount department stores, on a yield of around 6 per cent sets a strong post-COVID benchmark for an asset class plagued by uncertainty.

CS Square, in Melbourne’s west, has three supermarkets. A Kmart is coming as well.
CS Square, in Melbourne’s west, has three supermarkets. A Kmart is coming as well. Credit:

It follows another recent deal where retail giant Harvey Norman snapped up the large format Watergardens Homeplace in Melbourne’s north-west from QIC Global Real Estate for $97 million on a low 4.75 per cent yield.

Of all property classes, retail was hardest hit by the pandemic induced slowdown, although malls and landlords with a strong non-discretionary tenant mix have outperformed their peers.

“We have been following the performance of CS Square for a long period of time and feel that it is a perfect fit for our high-quality portfolio of convenience and service focused centres,” Mr DeLutis said.

Mr DeLutis said CS Square was a significant asset with exceptional growth potential in one of Melbourne’s key growth areas.

“The defensive nature of the asset is further strengthened due to its significant proportion of income derived from national businesses and importantly a centre WALE [weighted average lease expiry] in excess of seven years.”

The mall, in Caroline Springs’ town centre, was offloaded by the Lendlease managed Australian Prime Property Fund Retail (APPFR).


The sale included CS Commercial, a 1603 sq m complementary mixed-use precinct opposite CS Square, and another 1.28-hectares of strategically held vacant land in two separate lots.

Colliers International’s Lachlan MacGillivray and Carl Molony from Stonebridge Property Group managed the transaction.

Mr MacGillivray said retail was at the “rough end of the stick” for the past few years, but investors were realising “not all retail is equal.”

“There are some strong centres around like CS Square which are pandemic proof. You can’t get much more defensive than a pandemic-proof asset,” he said.

APPFR fund manager Anne MacSporran said the divestment was a strong result for investors “especially in light of recent market conditions.”

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Source: Thanks smh.com