This article is from the Australian Property Journal archive
MELBOURNE-based fund manager Fawkner Property has acquired the Mount Pleasant Centre in northern Queensland for $162.5 million amid demand from investors for high-yielding sub-regional malls.
The sale price reflected a net passing yield of 6.46% and fully leased yield of 6.55%.
At 22,519 sqm, the Mackay centre is the dominant retail complex within its trade area and the only sub-regional centre servicing a catchment of 112,520 residents.
Anchored by Coles, Woolworths and Kmart, it offers a major tenant weighted average lease expiry of 8.4 years and had been managed by ASX-listed Vicinity Centres on behalf of Commonwealth Bank Group Super.
They listed the centre in June with initial hopes of $175 million.
CBRE’s Simon Rooney, who negotiated the sale with colleague James Douglas, said the centre’s strong trading performance, dominance within its catchment and inherent income growth were key buyer draw cards, coupled with the asset’s strategic location within a major Queensland economic hub and growth region.
“Mount Pleasant Centre was one of the strongest performing regionally located, sub-regional shopping centres to be offered to the market in Australia in many years.”
The Coles, Woolworths and Kmart perform above industry averages, as does the centre’s food, service and convenience-related specialty component.
“With neighbourhood and freestanding retail assets selling at record pricing levels, investors are shifting their focus to high-quality sub-regional shopping centres, oriented towards non-discretionary spending,” Rooney said.
“This market segment has performed well during the dislocation caused by the pandemic, demonstrating net operating income stability and transparent income growth.”
PAR Group research shows the yield spreads between fashion-oriented sub-regional centres and neighbourhood centres this year widened to their biggest gulf in 10 years, and investors have taken note.
MA Financial Group has just paid $140 million to acquire the Woolworths and Big W-anchored Stockland Bundaberg sub-regional shopping centre on a meaty cap rate of 6.75%.
Haben Property Fund and Hong Kong investor The JY Group recently acquired Casey Central from UK investment giant M&G Investments for $225 million on a 5.4% yield, while CS Square in Melbourne was sold by APPF Retail to the DeLutis Family for $136.5 million on a cap rate of 6.25%.
Other notable recent transactions including the Perron Group’s Mirrabooka Square in Western Australia selling to Fawkner for $195 million, and Makris Group divesting Hallett Cove Shopping Centre in South Australia to Antunes Group for $71 million.
Figures from The Data App shows $854.2 million in shopping centre deals recorded over the three months the end of July, clear above the $258.9 million recorded last year when COVID had taken hold.
