This article is from the Australian Property Journal archive
FUND manager IP Generation has netted $35 million from the sale of Richmond Mall, after refurbishing the north-west Sydney metropolitan neighbourhood centre last year.
The transaction of the Coles-anchored, fully-leased centre represents a yield of 5.73%.
James Wilson and Ben Wilkinson of Colliers and JLL’s Sam Hatcher, Nick Willis, Sebastian Fahey and David Mahood negotiated the sale of 271 Windsor Street, garnering international and local interest among the 280 enquiries and 11 offers received.
IP Generation, headed by Chris Lock, picked up Richmond Mall as part of its 2021 acquisition of a $300 million portfolio of Sydney and regional NSW neighbourhood shopping centres from businessman Paul Lederer.
IP Generation undertook a refurbishment of Coles Richmond Mall in 2023, and leveraged the updated presentation and strong performance of the Coles supermarket to attract a diverse mix of 11 largely convenience retailers. The asset is 10% occupied with a weighted average lease expiry of more than eight years. Coles recently signed a 10-year lease until 2033 with further two five-year options.
“The sale of Richmond Mall is an excellent result for investors in the IPG Essential Retail Trust. IP Generation has added significant value to the asset throughout its period of ownership through both strategic investment and delivering strong leasing outcomes – including extension of the Coles lease,” said Alistair Dalzell, asset manager, IP Generation.
Wilson said the campaign engaged predominantly domestic and offshore private capital, and generated over $300 million in unsatisfied capital, “highlighting the depth of market for high quality Sydney metropolitan neighbourhood shopping centres.
“This was the first shopping centre acquisition for the Sydney based private investor, which reflects a key campaign theme of over 60% of bids being received for new mandates”
Opportunities to purchase Sydney metropolitan located neighbourhood centres remain limited, with only five centres transacting on-market in the last five years, according to the agents, who said the last on-market opportunity to purchase a sub-$40 million Sydney metropolitan neighbourhood centre was two-and-a-half years ago, fuelling demand for Richmond Mall.
Neighbourhood shopping centre activity gaining momentum
The sale of Richmond Mall comes as Coles-anchored Scone Village, in the Upper Hunter region, became the first non-metropolitan NSW neighbourhood shopping centre to be publicly marketed in 2024.
Scone Village occupies a strategic 8,878 sqm site in the town’s CBD, and provides 4,111 sqm of gross lettable area. Like Richmond Mall, it has a Coles supermarket and an additional 11 retail tenancies.
Retail remained the most traded commercial asset class in the first quarter of 2024. Colliers data showed $916 million worth of retail assets was traded in the March quarter, outpacing other commercial property sectors by at least $189 million.
In January, the recently constructed Coles-developed Huntlee Shopping Centre in the Hunter Region was sold for $33 million to a Sydney based private investor.
Also during the March quarter, Woolworths-anchored Victorian Wyndham Vale Square and Drouin Central sold to private investors for a combined value of over $45 million, while Coles Group listed the 2021-completed Andergrove Village Shopping Centre in Queensland’s Mackay, and the construction arm of rival Woolworths put up for sale a neighbourhood shopping centre in Clarkson, north of Perth, that was formerly a Bunnings Warehouse.
