PGIM JV Buying Melbourne Mall From QIC for $286M as Aussie Bets Continue

PGIM Real Estate has partnered with Australia’s Assembly Funds Management to acquire a Melbourne mall from Queensland Investment Corporation for A$440 million ($286 million), the latest in a series of Down Under buys for the US property player.

Woodgrove Shopping Centre in the western Melton suburb is a single-level mall on 27 hectares (66.7 acres) of land, the companies said Tuesday in a release. The property comprises 63,778 square metres (686,501 square feet) of lettable area and generates A$520 million in annual sales from stores including Coles, Woolworths, Aldi and Kmart.

The investment with Sydney-based AFM — a fund manager launched in 2019 by the Lowy family behind mall giant Westfield Corporation and led by former Westfield executive Michael Gutman — is being made on behalf of PGIM Real Estate’s Asia Core strategy. The last 12 months also saw the division of insurance giant Prudential Financial pick up office and logistics assets in Australia, with the firm aiming to invest $2 billion in Asia Pacific property during 2025.

“We remain very selective in the retail space, but this opportunity ticks a number of boxes for us, offering a solid existing cash flow, trading performance, as well as several opportunities for asset enhancement,” said Steve Bulloch, head of Australia at PGIM Real Estate.

Expansion Potential

Deal brokers Colliers and JLL marketed Woodgrove Shopping Centre after a 28-year carry by QIC, which manages A$125 billion in assets for the state of Queensland.

Woodgrove underwent three separate expansions by QIC and has room for further growth. The mall draws on a trade area population of 172,100, with that number forecast to rise to 290,120 by 2039, according to Colliers.

Upon completion of the transaction in the third quarter of this year, the retail property will join other recent additions to PGIM Real Estate’s fast-growing Australia portfolio.

Mingtiandi reported in February that PGIM and a local unit of US private equity firm Proprium Capital Partners had agreed to buy 20 Bridge Street, the longtime home of the Australian Securities Exchange, from Hong Kong toy tycoon Francis Choi for A$270 million. The 14-storey block in the Sydney CBD measures 20,150 square metres by net lettable area.

Last month, PGIM teamed with Australia’s Cadence Property Group to acquire a logistics and infrastructure asset in western Sydney from rail freight operator Pacific National for A$145 million. St Mary’s Intermodal Terminal comprises 157,669 square metres of land with a gross lettable area of 95,940 square metres and a 1.5 kilometre (0.8 mile) rail spur providing access to Port Botany on Sydney’s Botany Bay.

The St Mary’s buy came on top of the US fund manager’s February purchase of a 50 percent stake in a Queensland industrial estate from Aussie builder Stockland for A$207.5 million under a joint venture with KM Property Funds, as well as last July’s acquisition with Elanor Investors Group of a last-mile logistics site in Melbourne’s Mulgrave suburb.

Retail Revival

Woodgrove is QIC’s second big mall disposal this year after completing the A$900 million sale of Sydney’s Westpoint Shopping Centre to US property giant Hines and Australian fund manager Haben during the first quarter.

Investor interest in retail has perked up elsewhere in the region: APAC’s largest single-asset deal during the first quarter belonged to Hong Kong’s Gaw Capital Partners, which teamed with Singapore-based Patience Capital Group to acquire the Tokyu Plaza Ginza mall in Tokyo’s prime shopping district for $1 billion.

Privately held Gaw is taking over the management and leasing of the 50,093 square metre property, while Japan-focused Patience is helping to refresh the tenant mix.

On Tuesday of this week, private equity titan Blackstone revealed its acquisition of Kolkata’s South City Mall for INR 32.5 billion ($376.8 million), as one of India’s most committed inbound investors continues to expand its retail holdings in the world’s most populous country. The complex provides 92,903 square metres of retail space and generates annual sales in excess of INR 18 billion.