This article is from the Australian Property Journal archive
CONVENIENCE-based retail property owner Region Group has sold $133.2 million worth of investments after divesting the Soda Factory in Brisbane’s West End.
Region has sold the Soda Factory for $42 million, which is slightly above December 31 2023 valuation of $41.8 million and cap rate of 6.25%. But the sale price is below the June 30 2023 valuation of $44 million and December 31 2022 valuation of $46.5 million.
The sale will realise a capital gain of $10 million for Region over the 10 years of ownership, having acquired the property back in 2014, as SCA Property Group, for $32 million from a private investor.
Located at 69 Boundary Street West End, only 1km from the Brisbane CBD, the Soda Factory (formerly The Markets) is an inner city neighbourhood shopping centre, comprising 5,220 sqm of GLA.
It is anchored by a Coles supermarket with and 22 speciality retailers, with 226 car parking spaces.
The centre is located in an affluent area with an average household income of $113,681.
The sale of the Soda Factory comes hot on the heels of the divestment of Riverside Plaza in Tasmania for $14.0 million. Since the start of Region’s capital recycling program, it has sold six investments for $133.2 million of its $200 million target.
Meanwhile last month it acquired Cooleman Court, a convenience based centre in Canberra, for $74 million on an initial yield of 6.73%. The 10,469 sqm neighbourhood shopping centre is located in the affluent catchment of Weston and anchored by Woolworths and Aldi supermarkets.
Region this week announced the value of its portfolio increased by $38.8 million to $4.322 billion at 30 June 2024.
This movement in valuations is comprised of $11.6m (0.3%) increase in ‘like-for-like’ retail properties; $74.0m acquisition of Cooleman Court, ACT; $9.2m of development spend at Delacombe Town Centre, VIC; $14.2m divestment of Riverside Plaza, TAS; and $41.8m divestment of Soda Factory, QLD (held for sale in June 2024).
The weighted average capitalisation rate (WACR) is 6.07%, a movement of 0.03% since 31 December 2023.
Across the portfolio, 20 properties (19.3% by book value) were valued externally resulting in a $19.4 million (2.3%) decrease in valuation, whilst the remaining investments were internally valued, resulting in a $31.0 million (0.9%) uplift.
Proforma gearing post the acquisition, assets disposed/held for sale and the property valuations is 32.3%, comfortably within our target gearing range of 30% to 40%. Net Tangible Assets (NTA) is expected to remain in line with the 31 December 2023 NTA of $2.45, assuming no other balance sheet movements.
