This article is from the Australian Property Journal archive
THE Charter Hall Retail REIT and Core Plus Retail Fund have teamed up to buy the Centro Lake Macquarie property for $66 million.
The Lake Macquarie property consists of two adjacent retail centres, Lake Macquarie Fair and Mt Hutton Shopping Centre, anchored by Woolworths and Coles supermarkets as well as a Big W discount department store comprising a total lettable area of 20,440 sqm.
The combined property purchase price of $66 million represents a year one yield of 8.75% before acquisition costs and approximately $3,200 per sqm of lettable area, benefiting from a combined anchor tenant WALE of 13 years and in excess of $100 million moving annual turnover generated by the anchor tenants alone.
The assets were owned by the Centro MCS 24 syndicate, the properties were marketed for sale in December last year due to the syndicate’s high level of gearing and its inability to refinance. The sale price is at a discount of 2.9% to the December 2009 book valuations.
Investors in the trust will not a get a return because proceeds from these sales will pay all outstanding debt and liabilities. Following settlement, the syndicate will be wound up.
CQR CEO Steven Sewell said the acquisition is in line with the trust’s strategy to re-weight to the Australian market and will increase CQR’s exposure to Australia and New Zealand to 58% of the trust’s gross asset value.
In addition, CQR has also been granted an exclusive due diligence period in respect of two of the assets from Charter Hall’s managed fund, CPRF, being Home HQ Nunawading, Victoria and a 5.5 hectare property at Stafford in Brisbane.
Home HQ Nunawading is a 22,680 sqm fully integrated bulky goods retail centre constructed in 2006 and the property at Stafford is tenanted on long term leases to Bunnings hardware business and an adjacent industrial tenancy leased to a subsidiary of international firm John Wiley & Sons, and has future retail development potential.
Furthermore, CQR has received notice from its joint venture partner in New Zealand of their desire to terminate the co-ownership arrangement. This could lead to a sale of the trust’s 50% interest in the portfolio of 17 properties at a price determined by independent external valuation, or potentially a negotiated outcome whereby each co-owner receives a distribution of wholly owned assets from the portfolio.
Meanwhile the Charter Hall managed wholesale Core Plus Retail Fund will be restructured to become the unlisted Core Retail Fund for investment by retail investors.
Charter Hall Group joint managing director David Harrison said the newly created CRF will provide an attractive, stable retail investment product with quality tenants and long average lease terms, and is expected to have strong appeal with retail investors and their financial advisers.
It is not expected that the CPRF restructure will require further equity investment by Charter Hall, given the relatively low gearing of the fund post completion of these transactions. CPRF will cease to be consolidated in the group’s financial statements once Charter Hall’s stake falls below 50%.
Australian Property Journal
