Property investment giant Dexus has agreed to acquire a 25% stake in Westfield Chermside for $683 million, giving the company a significant holding in Australia’s second-largest regional shopping centre by both sales and gross lettable area.

The transaction values the entire Brisbane property at more than $2.7 billion and represents Scentre Group’s book value as of June 30.

The Dexus Wholesale Shopping Centre Fund exchanged contracts with Scentre Group for the acquisition, which aligns with the fund’s strategy of owning market-leading retail assets with strong growth potential.

Westfield Chermside generated $1.35 billion in total annual retail sales and attracted 17.6 million customer visits in the last calendar year.

Dexus executive general manager for retail Kirrily Lord described Westfield Chermside’s scale, performance metrics, and community integration as making it “an exceptional addition to the Fund’s retail platform, delivering both immediate performance and long-term value creation.”

Located 20 minutes north of Brisbane’s CBD, Westfield Chermside houses major anchor tenants including David Jones, Myer, BIG W, Kmart, Target, Coles, Woolworths, and Apple, alongside an Event Cinemas complex.

The centre features approximately 476 speciality stores, including Sephora, Uniqlo, and numerous local and international brands, complemented by a leisure and dining precinct.

The shopping centre holds historical significance as Australia’s first drive-in shopping centre, originally opening in 1957 as the Chermside Drive-In Shopping Centre.

Developed by Allan & Stark, the original centre featured an Allan & Stark department store, later acquired by Myer, a small arcade, and 700 parking spaces.

The groundbreaking concept has evolved into Australia’s largest single-level shopping centre.

Scentre Group will retain its role as property, leasing, and development manager for the joint venture, ensuring operational continuity under the new ownership structure.

The purchase price represents a valuation capitalisation rate of 5%, according to Scentre Group.

Scentre Group CEO Elliott Rusanow emphasised that sourcing new capital through joint ventures remains a key component of the company’s capital management strategy.

“Since the start of the Covid-19 pandemic, the Group has been successful in sourcing funding through innovative and various sources, without diluting security holder equity,” Rusanow said.

The transaction represents another step in Scentre Group’s long-term funding strategy, with proceeds providing additional capital to pursue strategic objectives focused on creating long-term value for security holders.

The deal demonstrates continued investor confidence in premium retail real estate despite ongoing challenges facing the shopping centre sector.

For Dexus, the acquisition strengthens its retail property portfolio with a proven high-performing asset in a strategic Brisbane location.

The investment reflects the company’s focus on market-leading properties with strong fundamentals, including high customer traffic, diverse tenant mix, and established market position.

The transaction occurs amid a challenging retail property environment where shopping centres face competition from online retail and changing consumer behaviour.

However, Westfield Chermside’s strong performance metrics and market position make it an attractive asset for institutional investors seeking stable returns from established retail properties.

Industry observers note that joint venture structures have become increasingly popular among major property groups as a method of accessing capital while retaining operational control and development expertise.

The arrangement allows Scentre Group to realise value from its asset while maintaining its management role and development pipeline.

The deal completion will be subject to standard regulatory approvals and closing conditions typical for large-scale commercial property transactions.

The acquisition reinforces the continued appeal of premium regional shopping centres among institutional investors despite broader sector challenges.