Leading Australian fund manager Trilogy Funds took its first steps into the large-format retail and  convenience retail asset classes with the purchase of a $220 million portfolio of property income  funds completed last week. 

The strategic acquisition bolstered Trilogy Funds’ overall portfolio of funds under management to more than $1.4 billion across its unlisted property, real estate credit, and diversified income funds.  

Trilogy Funds’ acquisitions included the management rights in four and co-investment stakes in three property trusts, which were all previously managed by various entities affiliated with Eildon Capital  Group. 

The trusts’ assets are all located in growth corridors and include the newly opened $80 million Harpley Town Centre at Werribee in south west Melbourne, the $58 million Caboolture Junction  shopping centre north of Brisbane, the $19 million BMW dealership in Berwick, southeast of  Melbourne and the $64 million neighbourhood shopping centre Elara Village at Marsden Park, in  north west Sydney. 

The acquired assets are mainly large A-grade shopping centres strategically located in key growth corridors and are typically anchored by very large national or international tenants such as Coles.  

Trilogy Funds Executive Director Henry Elgood said the strategic acquisition enabled Trilogy Funds to  diversify its overall portfolio into an asset class with solid fundamentals, strong growth potential and  increasing investor demand. 

“Large-format and convenience retail have proved to be resilient and defensive assets and historically  less volatile relative to other sectors, given the predominantly non-discretionary nature of their  underlying tenant cashflows,” Mr Elgood said.  

“The sector is continuing to see strong tailwinds, with a combination of factors such as rapid  population growth, a shift to convenient, quick-access shopping, and healthy rental growth across the  asset class. 

“These assets have been constructed under a develop-to-own model in high-density and strategic  locations with the aim to provide both capital upside to investors undertaking this development while securing tenants with strong covenants within a centre anchored by a major retailer like Coles.” 

Mr Elgood said Trilogy Funds also saw potential for further tenant-led developments in the large format retail and convenience sectors. 

“Part of Trilogy’s success lies in the ability to identify high quality assets offering favourable yields, as  well as assets that offer tenant-led expansion prospects. In these subsectors we typically see anchor  tenants lead the expansion process, undertaking research and identifying locations that are attractive  for future development.” 

Following completion of the transaction, property industry veteran Laurence Parisi who recently joined  Trilogy Funds from Eildon Capital will oversee the portfolio and asset management of these assets in  addition to Trilogy’s existing direct industrial property platform.  

This latest deal follows a busy year of property acquisitions for Trilogy Funds. The fund manager recently secured a $29 million dual warehouse property in Brendale, one of Queensland’s premier  industrial precincts, and expects to settle the purchase of a 3.76-hectare tilt-panel dual warehouse  adjacent to the Port of Geelong in Victoria, in coming weeks.  

Both assets will be added to the Trilogy Industrial Property Trust, now growing to more than $280 million. 

Trilogy Funds Manager Property Funds Laurence Parisi said Trilogy Funds are optimistic about equity  opportunities in industrial, convenience retail and large-format retail asset classes over the next 12  months, with several compelling acquisition opportunities currently under review. 

“There continues to be underlying demand from our investor base for commercial property  opportunities across the industrial and retail sectors, with a particular focus on assets with strong  tenant-led development opportunities,” Mr Parisi said. 

“Trilogy is focused on identifying assets being offered at attractive capitalisation rates, both on-market  and via our relationship network, creating a window of opportunity to expand the overall portfolio.”