This article is from the Australian Property Journal archive
FORT Street Real Estate Capital has acquired the Toormina Gardens shopping centre in Coffs Harbour for $83.3 million for its Fund III.
The 21,200 sqm Coles, Woolworths and Kmart-anchored convenience-based sub-regional centre is on a 5.8-hectare site with a large car park.
Currently 99% occupied, it changed hands at a fully leased yield of 7%, and includes three mini-majors, 40 specialty tenants and four kiosks. National tenants represent 80% of total income and include Best & Less, The Reject Shop, CBA, ANZ, Australia Port, Blooms Chemist, KFC, Subway, Donut King, Optus and OPSM.
David Rogers, director of investments for Fort Street Real Estate Capital, said the asset provides an attractive yield, and the acquisition is in line with the fund’s investment strategy to seek quality assets with strong covenants and long-term rental growth potential.
“We believe there is an opportunity to reposition and further strengthen the convenience offering through active asset management and a focussed leasing strategy,” Rogers said.
JLL’s head of retail investments – Australasia, Simon Rooney, negotiated the deal.
He said the sale is yet another example of the continuing trend of REITs selling down smaller assets to reinvest capital into either new opportunities or opportunities within their existing portfolio.
“We expect REITs generally to continue to adjust their portfolio to reduce risk and efficiently redeploy capital.
“Small sub-regional shopping centres which are largely food, service and convenience-based remain highly sought after. Yields for these assets are attractive relative to core, stabilised, assets which are trading at record low yields,” Rooney said.
Charter Hall Retail REIT sold off its 12,500 sqm Woolworths and Big W-anchored Renmark Square in South Australia for around $25 million to Revelop late last year, as it continued its portfolio repositioning program.
In September, Real Asset Management Group acquired the Mowbray Marketplace and Target Centre in northern Tasmania for $38.55 million, at a 7.35% yield with upside.
Sub-regional centre transactions totalled $1.0 billion in 2017, Rooney said, down from the yearly average of $2.4 billion between 2013 and 2016 due to the volume and scale of portfolio sales in prior years.
Rooney said unlisted funds are driving acquisitions in the retail sector are by far the dominant buyer group, accounting for 34% of all transactions last year.
Australian Property Journal
