This article is from the Australian Property Journal archive
SENTINEL Property Group has sold a high performing regional neighbourhood shopping centre with expansion potential in Dubbo for $20.17 million.
Riverdale shopping centre, anchored by Woolworths and Reading Cinemas, traded on a yield of 7.26% and is almost fully leased. Woolworths last year took up a five year option. The centre has a total lettable area of 6,156 sqm, including 17 specialty outlets and is situated in Dubbo’s main road of Macquarie St and has about 299 car parks.
A private investor picked up the asset.
The centre was the first acquisition for the open-ended Sentinel Countrywide Retail Trust when it was purchased from Charter Hall in October of 2014 for $14 million.
“The decision to sell was based on Sentinel’s strategy of buying at an opportune time and then selling based on our view of the market,” Sentinel managing director Warren Ebert said.
“This has been an excellent asset for Sentinel with Dubbo being a key transport and logistics hub servicing a huge area of NSW with a retail catchment of about 200,000 people plus visitors.”
Riverdale shopping centre is in the main street of Dubbo and as well as Woolworths it has the only cinema within 100 kilometres, making it an entertainment destination within the main trade area and the broader region.
Selling agent Steven Lerche, national director, retail investments at Savills said that despite the challenging retail environment, assets are still transacting, particularly neighbourhood centres, largely due to their affordability and exposure to non-discretionary retail.
“Neighbourhood centres and freestanding investments remain the preferred sub-class, with a strong non-discretionary presence.”
Lerche said the majority of neighbourhood centres are not prone to the effect of online retailing as they provide services and mostly attract customers to shop at the centre.
“The retail sector has taken a lot of criticism due to the headwinds of online retailing and shrinking retailer confidence. However, online retailing clouding investors’ views of the longevity of the shopping centre is being skewed by negative publicity and a complacency in the marketplace.”
“More progressive thinking about tenancy mix, attracting retailers that add to the overall experience and support the shopper’s needs is paramount.”
“With the knowledge of interest rates being lower for longer and the volatility of the stock market, property remains a safe haven for long term investors.”
Savills also sold Erindale Shopping Centre in Canberra off market over the summer. Charter Hall netted $39 million for the Wanniassa asset, also anchored by Woolworths and supported by 25 specialties.
Retail property investment declined in 2019 amid a challenging trading environment, but Australian supermarket transactions reached a record high.
Listings are expected to fall this year after two strong years of investment volumes. JLL expects sales results to remain robust in 2020, however, due to limited acquisition opportunities and continued demand for defensive assets.