This article is from the Australian Property Journal archive
ELANOR Retail Property Fund has sold the Auburn Central in Sydney’s west for SCA Property Group for $129.5 million on a yield of 6%, after buying it only four years ago for $68 million on an 8% yield.
The sale price is a 4.9% premium to book value of $123.5 million and follows the successful repositioning of metropolitan neighbourhood stopping centre, which realised a 24.5% IRR for the fund.
Fund manager Michael Baliva said the transaction was completed off-market following receipt of several unsolicited offers for the property.
“Since ERF acquired the property in 2016, we have been focused on executing our strategy to unlock value through actively repositioning the asset. This has resulted in Auburn Central being converted from a large sub-regional asset to a triple-supermarket neighbourhood centre,”
Located 20km from the CBD, the 15,424 sqm centre is triple-supermarket anchored to Woolworths, ALDI and Tong Li, supported by 52 specialty stores heavily weighted to non-discretionary categories.
Elanor Investors Group CEO Glenn Willis the sale following the successful execution of the fund’s repositioning strategy at the asset with the project generating a 12% income yield on the total development cost of $20 million.
“The fund is well positioned to grow through the acquisition of further high-quality, value-add retail properties.” Willis continued. “Given the resilience of the fund’s non-discretionary retail focused shopping centres and demand for strongly performing neighbourhood shopping centres, discussions are in progress with several parties in relation to the divestment program for the fund’s income assets.”
Proceeds from the sale will towards repaying debt and reinstating fund distributions which were suspended due to economic uncertainty created by COVID-19, as well as commencing an on-market buyback of up to 10% of ERF’s issued securities.
Meanwhile the fund has completed the first stage of its retail repositioning strategy for Tweed Mall introducing a new ALDI as the centre’s third major supermarket and completing a tenancy remix.
Trading activity across the fund’s portfolio continues to improve as the Government imposed restrictions related to COVID-19 are being further relaxed. Current trading occupancy is 99.5% of leased area.