Lendlease puts Dress-Smarts on block again: Second attempt at $300m sale hit by Covid

Australia’s Lendlease is again trying to sell two New Zealand outlet shopping centres in a deal expected to be around $300 million after failing to quit the assets three years ago.

In October 2019, the Barangaroo-headquartered business tried to sell its Dress-Smart centres at Auckland’s Onehunga and Christchurch’s Hornby.

But by early 2020, Covid and lockdowns had hit and the first deal was scuppered, with a keen buyer who was never named withdrawing.

“We had a highly competitive campaign in 2019 but unfortunately Covid disturbed the process,” said Lachlan MacGillivray, Colliers’ retail capital markets managing director Asia Pacific from Sydney today.

Richard Kirke, Colliers’ international sales director in Auckland, said considerable offshore interest had been shown in the assets when they were last marketed three years ago.

But that process included Dunedin’s Meridian Mall, he said. Kirke successfully sold that shopping centre in the last campaign.

Now, the multinational construction, property and infrastructure company has called back Colliers and CBRE to try to sell the two properties.

Overseas Investment Office clearance is likely to be needed before any sale can proceed because the transactions will be more than $100m – one of the thresholds for its involvement.

Back in 2016, a third Dress-Smart at Tawa, Wellington was sold.

Australian media say potential buyers for the Auckland and Christchurch centres might be the Adelaide-based DiMauro Group which last year bought Christchurch’s The Palms, funds manager Oyster Property Group of Shortland St and Australia’s listed Vicinity Centres.

None of those businesses confirmed any interest. Oyster already manages Dress-Smarts in Auckland and Christchurch so has a close existing connection.

Oyster manages more than 20 property funds structured for retail and wholesale investors, including Oyster Industrial and the diversified Oyster Direct Property Fund.

It partners with institutional capital and private equity investing in commercial property and holds management mandates with third party investors in development, asset management, property and facilities management, and retail leasing.

Oyster manages retail, office and industrial assets worth $2.1b. Oyster Property Group is half owned by ASX-listed Cromwell Property Group.

Expressions of interest for the Dress-Smarts are being sought by March 24.

Scott Mosely, Lendlease investment management managing director, said: “Both centres have been strong performers for the fund with high-quality income growth. Dress-Smart has been a well-known brand in New Zealand for the past 24 years with both centres offering a leading mix of international and national brands, along with future growth opportunities.”

Onehunga has 13,293sq m on a 2.2ha site and 99 tenants including Adidas, Puma, Nike, Converse, Coach, Tommy Hilfiger and Calvin Klein.

The property offers significant development potential in the Onehunga Town Centre, an area identified by Auckland Council as a key site for development as part of a wider transformation and regeneration plan, a statement on the sale said.

Hornby has 7136sq m on a 1.2ha site and is in an area with a potential trade population of 491,000 people.

Entrepreneur John Bougen and associates established the concept. He is an author, publisher and photographer and was director of Parnell-based Prime Retail.

He founded then sold the Dress-Smart chain, which started in Onehunga. ING Retail Property Fund owned it for some years afterwards.

In 2010, the Overseas Investment Office approved the $185.13m sale of three Dress-Smarts and the Meridian Mall in Dunedin to Lendlease.

In 2019, Lendlease fund manager Matt Bowyer said: “These properties have performed well for our investors, but the fund was created to run for a fixed term and that has triggered the sale process. We expect the portfolio will be strongly sought after by domestic and international parties given the assets’ strong fundamentals and long-term financial performance.”

But Covid dashed his high expectations, hence the new sales attempt.

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