This article is from the Australian Property Journal archive
CVS Lane and Consolidated Properties Group (CPG) have lobbed a $500 million portfolio of Coles and Woolworths anchored neighbourhood shopping centres in south east Queensland to the market.
The assets are in Karalee, Palm Beach, Wilsonton, Springwood and Keperra, and have been subject to substantial upgrade works undertaken by Liberman-family-backed CVS Lane and CPG, with each offering further significant development potential.
There is a high proportion of daily needs, non-discretionary and essential service retail tenants across the portfolio that have delivered strong performances since acquisition, particularly during the recent pandemic, catching the eye of investors.
“CVS Lane and CPG have received multiple unsolicited offers for the assets over the past 18 months, reflecting this unprecedented level of demand,” said Lee Centra, CEO, CVS Lane Capital Partners.
“The assets have gone from strength to strength in terms of their valuations and sales performances and proven very resilient in the face of major disruptions in recent years, such as the pandemic and severe weather events.
“With our original Trust approaching maturity and unprecedented high demand for this asset class, particularly in South-East Queensland, we have formed the view that there is now a good opportunity to test the market for a potential sale.”
Despite a 13% dip on last year’s opening quarter, the retail sector continued its recent good run and saw $2.7 billion of deals in the early part of this year, according to Real Capital Analytics.
Don O’Rorke, CEO of CPG, said the developer’s strategy has “always based around finding assets that offered strong refurbishment and development potential to hold for the long-term”.
JLL’s Jacob Swan and Sam Hatcher, and CBRE’s Simon Rooney, Joe Tynan and Michael Hedger have been appointed as joint sales agents for the campaign, which will formally kick off next Thursday.
“Investor interest and demand for neighbourhood retail has once again heightened. A strong shift towards defensive assets with low-income volatility is occurring given macro uncertainty,” Swan said.
“There remains significant equity capital available for low-risk retail assets – from a range of domestic and offshore institutional sources, such as pension funds and unlisted core funds.
As a result, we’re seeing a tactical reallocation towards neighbourhood retail centre, underpinned by a strong daily needs offering, given the resilient performance through COVID-19 and the high-income returns offered relative to prime assets in other sectors.”
There were 61 neighbourhood centres that changed hands nationally over 2021, with a record deal volume of $2.45 billion, 22% above the previous 2019 high, according to JLL.
Tynan said the fundamentals of QLD-based retail assets have performed very strongly, primarily driven by the highest population growth in the country, including high levels of interstate migration for lifestyle reasons and housing affordability.
Retail turnover in supermarkets has grown by 16.8% in Queensland since the start of the pandemic, well above the national average of 12.4%.
CBRE data suggests that nationally, neighbourhood centre capital values have risen at twice the rate of inflation over the past 20 years.
