This article is from the Australian Property Journal archive
A PRIVATE investor has kicked off the holiday season shopping early, snapping the HomeCo Box Hill for $67.50 million from ASX-listed HomeCo Daily Needs REIT, in one of Melbourne’s biggest large format retail deals of 2023.
The sale price reflects an initial yield of 5.5%, an improved building rate of $4,858/sqm and a land rate of $1,705/sqm.
JLL’s senior director of retail investments Stuart Taylor and director of retail investments Tom Noonan handled the sale on behalf of the REIT, it was sold to a private investor.
In a year in which market activity has slowed to a crawl, large-format retail (LFR) assets have been one of the most thinly traded asset classes in the retail sector. Volumes for retail transactions in the first half of 2023 are down 50% on the previous year, and with only 30 deals, this year’s first half now represents the lowest on record.
“HomeCo Box Hill represents a strong performing LFR asset which is underpinned by an exceptional land holding in a prime location – such attributes are what many of the most aggressive capital sources are looking for in the current market.” Taylor said.
“In the current higher interest rate environment, investors are seeking either high yielding assets or properties which have alternative levers to drive capital appreciation, such as reversionary upside in land value.
“Whilst transaction volumes remain subdued in the retail sector, there is significant demand from well capitalised private investors. These buyers are seeing this time in the cycle as an opportunity to secure prime assets which rarely become available for purchase from long-term holders,” said Taylor.
The sale of Box Hill is the largest Victorian LFR transaction for the second half of 2023, and third largest deal nationally for the full year. The transaction follows other notable LFR deals brokered by JLL in 2023, including the sale of HomeCo Midland, WA acquired by PWD for $74.75 million and HomeCo Epping, VIC which was acquired by Forza Capital for $70.25 million.
Other Victorian LFR transactions include Vicinity’s recent sale of the Broadmeadow Homemaker Centre on a 7% yield.
The centre comprises a GLA of 13,903sqm and a weighted average lease expiry of 6.5 years (by income) to provides 13 tenancies including Chemist Warehouse, BCF, Petbarn and Decathlon. It is set on a 3.96 Hectare landholding, currently zoned Industrial 1, and forms part of a strong retail precinct, immediately adjoining Bunnings Warehouse.
