This article is from the Australian Property Journal archive
TEMPTING offers to purchase the Gordon Centre have prompted owner Charter Hall Retail REIT to test the open market for the fully leased Woolworth and Harvey Norman-anchored asset.
The trust has appointed Colliers International and Stonebridge Property Group to market the neighbourhood shopping centre, which includes the 1,896 sqm Gordon Village Arcade and adjoining assets.
Located 802-808 Pacific Highway in Sydney’s north-western suburbs, the centre has a total of 38 tenants, including office and medical operators, and has a gross lettable area of 11,791 sqm, with 539 car spaces. Gordon Village Arcade has 22 tenants, including Australia Post.
Charter Hall REIT acquired the centre for $67 million in 2010 from a Dexus-managed private unlisted investment syndicate.
The divestment would be in addition to those identified for sale as part of the FY17 financial results, and existing guidance for FY18 does not include any impact from the potential sale.
“The decision to appoint agents follows unsolicited enquiries to purchase the centre that indicated a realisable value significantly in excess of current book value reflecting the re-development potential of the site,” fund manager, Scott Dundas said.
He added that the trust had previously identified Gordon Centre as an asset with significant redevelopment potential.
“Due to the current mixed use zoning and floor space ratio along with proximity to existing public transport infrastructure, the potential exists to redevelop the property with a major residential and retail asset in the heart of the Gordon Town Centre,” Dundas said.
The Gordon Centre was built in 1960 and refurbished in 1985, and the Village Arcade in 1955 before further works in 1982.
Dundas said the planning, approval and development process would be heavily de-risked by the significant holding income.
With the announcement of its annual results, Dundas had said value enhancing redevelopment was a key element of the trust’s growth strategy, but the offers for the Gordon Centre appear to have outweighed its future potential for Charter Hall REIT.
The property has three street frontages and is close to the Gordon railway station and bus interchange, as well as an existing pedestrian air-bridge across the Pacific Highway that links both sides of the Gordon Town Centre with the leasehold interest of the bridge included in the offering.
Proceeds of any sale would go to repaying debt and ongoing capital management activities, including the further buyback of trust securities.
In May, Charter Hall REIT acquired the 24,000 sqm Salamander Bay shopping centre in Port Stephens, north-east of Newcastle, for $174.5 million.
The purchase from Vicinity Centres’ unlisted fund Vicinity Retail Partnership came at a 6% yield. The centre has a Coles, Woolworths, Kmart, Aldi and Target Country, as well as three mini-majors, 64 specialty tenancies, nine kiosks and six ATMs.
A private equity trust purchased the Coles-anchored Market Plaza shopping centre in Sydney’s south-western suburb of Chipping Norton for $30.35 million in July, at a 5.7% yield.
Australian Property Journal
