This article is from the Australian Property Journal archive
RETAIL property investor Lascorp has picked up three supermarket-anchored shopping centres in regional Victoria from Charter Hall Retail REIT for $62.35 million in an off-market deal.
The assets include Coles Bairnsdale, for $18.4 million on a yield of 5.45%, Kyneton Shopping Centre, for $22.85 million at 5.5%, and Coles Moe, which sold for $21.1 million on a 5.7 per cent yield.
Charter Hall Retail REIT has been selling off non-core retail assets as it optimises its portfolio. The trust will take a 30% interest in a Charter Hall partnership that will spend $840 million for a 49% interest in a portfolio of 225 BP-branded petrol stations, and has recently taken a 20% stake in the Pacific Square and Bass Hill Plaza shopping centres.
Lascorp executive chairman, Michael Lasky said the transaction is in line the company’s strategy to focus more on income producing investments.
“We have every bit of confidence in the supermarket and convenience retail market as a long term defensive asset class,” he said.
“The assets acquired are all similar in nature, being net lease supermarkets with a long history of strong performance with opportunity for consistent future rental growth,” Lasky said.
Mark Wizel and Justin Dowers of CBRE brokered the deal.
“Commercial property yields continue to appeal to a broader range of buyers turning their backs on the lower returns on offer from bonds or cash,” Wizel said.
“The group’s purchase of three very passive retail assets makes a very big statement about just how hard it is to find returns in the current market, not to mention the value of the cash flow that is stemming from these defensive supermarket assets.”
The deal follows CBRE’s sale of a standalone Coles Mentone late last month on a yield of 3.39%, the strongest since that of Coles Clayton, at 2.57%, in early 2018.
Wizel said over 2019 there had been a trend towards defensive property investments with neighbourhood centres and standalone supermarkets doing particularly well despite the significant retail headwinds.
Interest has come from regular equity market investors chasing yield and security, and those attracted to the potential development upside of some assets, he said.
Yields have come it at around 5.5% this year, following an average closer to 4.5% over 2018.
