Abacus keen to add more factory outlets

Abacus keen to add more factory outlets
The acquisitive Abacus has been offered more than $1 billion worth of properties to buy, most of which are in secondary markets in recent months, said Dr Wolf,[link widoczny dla zalogowanych], the company's managing director, who has flagged an interest in some of General Electric's Australian real estate assets that are still for sale.
But on the development front it has focused on its Birkenhead centre at Drummoyne in Sydney's inner west.
"We can see there is a genuine role for Birkenhead in the market, it is something the customer wants, they want to feel that they are getting good value."
Before Abacus announced that it had purchased an office and retail property at 33 Queen Street in Brisbane for $34 million this week, Dr Wolf flagged that the group was looking at buying a property in the Queensland capital where the group was planning a "mini Birkenhead".
The group has so far spent $25m improving Birkenhead, planning to open a Nike outlet store, a Lee Wrangler outlet shop and an Aldi shopping centre in the floor beneath the Coles supermarket,[link widoczny dla zalogowanych], which would boost the centre's moving annual turnover by 10 per cent.
Aldi plans to open two other supermarkets at Ashfield and Liverpool in Sydney, also owned by Abacus, Dr Wolf said.
In 2010, Abacus and South African billionaire Nathan Kirsh bought Birkenhead Point shopping centre and marina for $174m, and in the six months to December the centre's moving annual turnover has grown from $125 to $157m, a rate of 12 per cent a year. It is currently $162m.
Dr Wolf said that the mall's occupancy costs had fallen to 12.5 per cent from 16 per cent because turnover had increased,[link widoczny dla zalogowanych].
Oroton was the strongest performer in the centre on a salespersquaremetre rate, Dr Wolf said, and other retailers were interested in the mall because the rents they paid were about half the level compared to other premium centres. Specialty rents at Birkenhead are $500$600 per square metre.
There were also plans for a modest expansion of the marina next to the mall, Dr Wolf said, enabling it to house some of the largest boats in Sydney Harbour, and there were plans to add a medical centre and a discount pharmacy,[link widoczny dla zalogowanych], as well as an improved food offering.
Across the market,[link widoczny dla zalogowanych], Dr Wolf said there were plenty of opportunities to buy properties in nonCBD markets, but he was concerned about other drivers in the market other than property fundamentals inflating price.
" There are two drivers at the moment one is the sheer weight of money,[link widoczny dla zalogowanych], and the other is the true economics that underpin the real estate market.
"You can actually see cap rate (capitalisation rate) compression in the CBD (office) markets, and that's purely a phenomena of weight of money it's got nothing to do with fundamentals so that in itself is quite worrisome."
Rents of $690 a square metre were achieved within buildings at Macquarie Street in Sydney in 1992, and in the premium strip, Martin Place, securing the same rate of rent was currently a challenge, he said.
"In real terms, there has been no growth for 20 years, so if you are the owner of an office building in the centre of the CBD you've had effectively no real growth in rents for quite a long period of time," he said.
"We run the danger that the weight of money will drive the values, which aren't supported by property fundamentals."
The gap between the price of primary and secondary assets was widening, and he believed this trend would continue over the next 12 months, which would create buying opportunities.
Abacus, an opportunistic buyer that has a portfolio of $128m worth of industrial properties as well as shopping centres and offices, was interested in suburban office markets such as North Sydney and St Kilda Road in Melbourne.
Dr Wolf made a $23m profit in 12 months for Abacus on the 343 George Street office and retail property the firm bought in Sydney from Dexus for $55m in October 2009 amid the global financial crisis, and sold to the City of Sydney Council for $78m almost a year later. Eighteen months ago, Abacus bought 484 St Kilda Road, paying $3300 a square metre. In the most recent comparable sale on the strip, the buyer paid $4100 a square metre, Dr Wolf said.
He said a number of suburban office buildings Abacus had purchased had the potential to be converted into residential.
"Historically, we have bought smaller assets from the listed groups, and we have bought assets from funds that reach their terminal life," Dr Wolf said.
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