This article is from the Australian Property Journal archive
THE $9.2 billion ISPT has sold the Southgate Plaza shopping centre in Morphett Vale, South Australia to the Charter Hall Retail REIT for $60 million, reflecting a fully leased yield of 7.5%.
The sale of Southgate Plaza comes as ISPT prepares to finalise a second tranche of acquisitions with Coles.
The Charter Hall Retail REIT has simultaneously divested its assets in Poland for €174.5 million and completed the sale of a small centre in the United States located at Powers Ferry in Atlanta Georgia for $US3.6 million.
REIT fund manager Scott Dundas said Southgate Plaza is a good fit with the trust’s existing asset base.
“This acquisition enables us to immediately redeploy the proceeds from the sale of the Polish portfolio, in line with our stated strategy, and brings our Australian supermarket anchored portfolio up to 76 assets.
“This transaction reduces the REIT’s US exposure to just two assets, one of which is under contract and the other is being marketed for sale. We anticipate that these last two US assets will be sold before the end of this calendar year,” he added.
Southgate Plaza is 15,844 sqm sub-regional shopping centre located approximately 21 kms south-west of Adelaide’s CBD, in one of the city’s key growth corridors. It is anchored by a Coles supermarket and Target with a weighted average lease expiry of 8.0 years. Coles, Target and Kmart Tyre and Auto contribute 45% of the centre’s current base rent, with the balance from 39 specialty retailers, which operate on an average sustainable occupancy cost of 9.7%.
Jones Lang LaSalle’s national head of retail investments Simon Rooney acted on behalf of ISPT. He added that there is substantial upswing underway in the sub-regional retail sector at the moment.
“We are working with various investors that are seeking to boost their exposure to high performing sub-regionals,” he continued.
According to JLL, total sub-regional transactions for 2013 are close to $1 billion ($963.7 million year to date) and follows $983.2 million in 2012.
Rooney said the growing pool of investors targeting this asset class is providing some vendors with the confidence to progress with sales. He pointed to the sale of Bunbury Forum (WA) last month to Challenger for $143.275 million; Charter Hall and Canada’s PSP Investments entered into a put option agreement to acquire the Innaloo shopping centre and Shoppers Village (WA), and the adjoining Innaloo Mega Centre for a contract price of $255 million.
In the month of February, Rockworth Capital Partners acquired Phoenix Shopping Centre (WA) for $75.8 million from a domestic syndicate and CFSGAM Property Enhanced Retail Fund (CERF) acquired Centro Keilor (VIC) for $67 million from Centro MCS 33.
ISPT has recently increased its exposure to the sub-regional retail sector. In February this year, the group acquired a 50% interest in a portfolio of assets from Federation Centres for $371.4 million. The portfolio comprised four sub-regional centres; Warriewood(NSW), Cranbourne(VIC), Karingal(VIC), Mandurah(WA) and one neighbourhood centre, Halls Head (WA).
Last week Property Review reported that ISPT is close to sealing a second round of acquisitions with Coles property after the pair entered into a $532 million joint venture in May this year.
In June Challenger acquired a 50% interest in a portfolio of assets from Federation Centres for $602 million. The portfolio included three sub-regional centres; Toormina (NSW), Karratha (WA) and Sunshine Marketplace (VIC).
JLL Research shows yields for sub-regional centres nationally currently range between 6.50% and 10.00% (as at September 2013) with weighted average median of 7.66%, compared with the 10 year long term average of 7.45%.
Property Review
