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Within two months of a pivot towards agricultural land investments, property fund manager Primewest (ASX:PWG) has today signalled its view on another counter-cyclical asset class - neighbourhood shopping centres.
The Western Australia-based company has unveiled plans to create a new $300 million Australian "daily needs" property trust under a new institutional mandate, with Spring Farm Shopping Centre south of Sydney under contract as its first acquisition.
Primewest executive chairman John Bond says the new trust will acquire up to $300 million of retail assets across several states with a pipeline of potential opportunities.
He says COVID-19 has shone a light on a number of highly successful retail assets that have continued to perform well during the crisis due to their strong tenant mix focused on non-discretionary or services-based retailers with a focus on the daily needs of visitors.
"This made a new retail trust highly attractive, especially given the defensive nature of the Spring Farm centre which had proved to be very resilient and therefore highly attractive as an investment," says Bond.
Spring Farm Shopping Centre sits in a growing residential catchment area, and is immediately opposite the soon-to-be-opened Spring Farm Community Centre which is expected to generate extra foot traffic.
"The Woolworths supermarket at Spring Farm performs strongly and other facilities nearby include a McDonald's, KFC and a Caltex service station, all of which add to the overall appeal of the centre," says Bond.
He says Woolworths is proving to be a very strong and defensive tenant, which combined with the strong specialty tenant mix and length of leases highly attractive.
The move appears to be taking a leaf out of Shopping Centres Australasia Property Group's (ASX: SCP) playbook; a company whose main focus is suburban shopping centres anchored by major chains like Woolworths, Coles or Kmart.
"You don't buy a suit in our shopping centres. It's really about supermarkets, convenience shopping, and they're very busy at the moment," SCP CEO Anthony Anthony Mellowes told Business News Australia in March as social distancing measures were taking their toll elsewhere.
Last month SCP raised $279.3 million in a bid to acquire more of these kinds of properties on the cheap.
At the start of this year Primewest was planning on launching a $288 million commercial property IPO, but those plans were deferred when the COVID-19 crisis hit. The group also recently purchased the site of Seven West's Perth HQ for $75 million.
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