Dress Smart Onehunga is for sale - but not at a discount.
The Auckland retail outlet, which is famous for its low prices, is part of a portfolio of New Zealand retail properties that Lendlease Funds Management is selling, with interest expected in excess $350 million from domestic and overseas buyers.
Also part of the portfolio is the Dress Smart outlet in Hornby, Christchurch, and Meridian Mall in Dunedin.
Australia-based Lendlease Funds Management has appointed Colliers International to market the portfolio for sale in New Zealand. CBRE Australia has been appointed together with Colliers International to market the properties to offshore prospects.
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Lendlease fund manager Matt Bowyer said the properties had performed well for their investors, but the fund was created to run for a fixed term "and that has triggered the sale process".
Dress Smart in Hornby, Christchurch.
“We expect the portfolio will be strongly sought after by domestic and international parties given the assets’ strong fundamentals and long-term financial performance,” her said.
John Goddard, of Colliers’ New Zealand Capital Markets team, said the portfolio provided immediate scale with an overall gross lettable area of 36,362.4sq m. "The total portfolio is expected to attract interest in excess of $350 million," he said.
Dress Smart had been popular with New Zealand shoppers for more than two decades, he said, adding that outlet centres were in demand.
“The principle behind the outlet shopping centre concept is for branded manufacturers to offer substantial discounts to consumers, and this concept has gained traction in recent years as a convenient direct alternative to online shopping,” says Goddard.
“Outlet centres are experiencing significant demand from investors, with many global funds having an explicit mandate to invest in the sector."
Meridian Mall in Dunedin.
Lachlan MacGillivray, of Colliers International Australia, said there was likely to be a broad buyer base for the assets, "given the properties offer geographic and sector diversification, with proven sales growth over a long period of time".
He said investors would be attracted to the attractive yield, low acquisition costs and the dominance each property offers within each city’s trade area.
Lendlease bought the portfolio in 2010 for $185 million. The portfolio at the time also included the Dress Smart outlet in Tawa.
Dress Smart Onehunga opened in 1995 and has 99 per cent occupancy, with 101 tenants in total.
Dress Smart Hornby in Christchurch is the South Island’s only dedicated outlet centre. It is part of a broader, complementary shopping destination that includes The Hub Hornby, a Countdown supermarket and a range of large format retail stores.
It has 99 per cent occupancy as at June 2019, with 53 tenancies including 47 specialty shops.
Richard Kirke, International Sales Director at Colliers New Zealand, said although Christchurch and Auckland would typically be well known to offshore investors, “Dunedin is less well known, but nevertheless will be attractive due to its population growth and the council’s significant infrastructure investment in both the hospital and its CBD".
The three properties are being sold as a national portfolio with the closing date for offers at 4pm, November 21.
