This article is from the Australian Property Journal archive
ASX-listed SCA Property Group has finalised its $18.66 million acquisition of the Woolworths-anchored Cooloola Cove Shopping Centre in the Gympie region, with neighbourhood retail assets continuing to be snapped up by defensively-minded investors.
The vendor, Brisbane headquartered private equity and syndication firm Altor Capital, paid $12.85 million just three years ago for the neighbourhood centre, and focussed on “repositioning the specialty tenancy mix to a nucleus centred around daily needs and essential services”, according to Altor director Phil Rhodes.
“After introducing new uses, including a large medical centre, and resetting existing core tenant leases, the strategy culminated in a sale of the asset delivering our investors strong running returns coupled with significant capital uplift.”
Cooloola Cove Shopping Centre is within the master planned residential community Cooloola Sands, 50 kilometres north east of Gympie, and features 10 specialty shops.
Peter Tyson of Savills, who negotiated the off-market transaction – as well as the property’s last changing of hands – said the deal set new benchmark yield for regional Queensland of 5.85%.
“By focussing on daily needs, Altor’s strategy brought more rigour to the tenancy mix and drawing power of the centre and enhanced income,” he said.
“Interestingly, the retail sector experienced a number of positive side effects from the Covid experience, including an uplift in non-discretionary spending by consumers at the local neighbourhood centre. Investors have been quick to recognise the income security flowing from anchor tenants such as Woolworths and Coles, and low-risk nature of assets that service the demand for daily needs and essential services.”
“Convenience based neighbourhood centres anchored by Coles, Woolworths and IGA in the sub $30 million price point are becoming scarcer in the market.”
“Throughout the GFC and again during COVID, this asset class has proven its resilience.”
On the buy side, SCA Property Group has also recently acquired the triple supermarket-anchored Auburn Central in Sydney west for $129.5 million, on an implied fully let yield of 6.0%, as well as Katoomba Marketplace in the Blue Mountains for $55.1 million, representing an implied fully let yield of 5.6%, and Centre shopping centre in the Northern Territory for $33 million.
In response to the COVID-19 outbreak it raised $280 million of new equity and has since made $178.9 million of acquisitions.
The group’s first half net profit lifted 14.1% to $102.9 million due in large part to an increase in property values.