This article is from the Australian Property Journal archive
MA Financial Group remains sweet on retail assets, paying $140 million to acquire the Stockland Bundaberg sub-regional shopping centre that it will rename Sugarland Plaza.
Formerly Moelis Australia, MA Financial bought the Woolworths and Big W-anchored 23,522 sqm centre at 3% above book value, and on a capitalisation rate of 6.75%.
It also features mini majors Best & Less and JB Hi-Fi, in addition to over 50 specialty retailers. Shopping Centre News’ 2020 Little Guns report listed the centre as ranked nine in Australia for specialty productivity.
CBRE’s Simon Rooney negotiated the well contested, off-market transaction on behalf of Stockland.
MA Financial who have purchased several retail assets in recent years including a 50% stake in Westfield Marion in 2019, and earlier this year also acquired specialist retail property services firm RetPro Group.
The Plaza will be held in a new managed fund currently being offered to wholesale investors.
“Our conviction in the centre is underpinned by its robust fundamentals including high exposure to non-discretionary spend and service-based retailers, well above-average speciality productivity and very low occupancy costs,” MA financial managing director and portfolio manager, Richard Germain said.
“We certainly are seeing strong investor demand for this product, particularly given the strong prices achieved on some sub-regional assets that have transacted since we agreed this acquisition.”
Rooney said the competitive outcome is a function of limited supply of high-quality retail offerings available for sale, coupled with an increasing capital allocation to retail as an asset class, given the compelling comparative returns on offer.
Stockland acquired the centre via two separate 50% acquisitions in 2014 and 2016.
“With neighbourhood and freestanding retail assets selling at record pricing levels, investors are shifting their focus to high quality sub-regional shopping centres oriented towards non-discretionary spending,” Rooney noted.
“This market segment has performed well during the dislocation caused by the pandemic, demonstrating net operating income stability and transparent income growth.”
Haben Property Fund and Hong Kong investor The JY Group last month acquired Casey Central from UK investment giant M&G Investments for $225 million, in Victoria’s largest sub-regional shopping centre sale in five years. while CS Square in Melbourne was sold by APPF Retail to the DeLutis Family for $136.5 million on a cap rate of 6.25%.
PAR Group research shows the yield spreads between fashion-oriented sub-regional centres and neighbourhood centres this year widened to their biggest gulf in 10 years.
“While private investors and syndicates are spearheading buyer interest in the sub-regional sector, the appetite from institutional investors is also increasing given the achievable returns,” Rooney said.
