SCA goes shopping in Ballarat

THE Delacombe Town Centre has been snapped up by SCA Property Group for $112 million, as sub-regional retail asset transactions so far this year outpace the entirety of 2020.

The convenience based sub-regional shopping centre is located in Ballarat, around 100km north west of Melbourne, and spans 19,098sqm of floor space.

Stuart Taylor and Sam Hatcher from JLL managed the off-market sale on behalf of vendors, Troon Group, for an implied fully let yield of 5.34%.

“The sale of Delacombe Town Centre sets a new benchmark for non-metro sub-regional shopping assets right across Australia,” said Taylor, senior director of retail investments at JLL.

The deal comes hot on the heels of GPT’s $402 million sale of Wollongong Central to Sydney-based property funds manager Haben and its Hong Kong-based backer JY Group, which also bought Roselands for $167 million, whilst GPT offloaded Casuarina Square in Darwin for $420 million, while UniSuper and Cbus Property bought major stakes in AMP Capital’s Pacific Fair and Macquarie Centre malls for $2.2 billion in Australia’s largest-ever retail property transaction.

Australia’s retail market activity has been dominated of late by neighbourhood shopping centres, convenience centres and large format complexes that have performed strongly and continued to stay open through the pandemic, although sub-regionals – the “middle child” – have also seen a resurgence, according to Real Capital Analytics’ Ben Martin Henry on Australian Property Journal’s Talking Property podcast.

Delacombe was developed by Troon Group in 2017 and is anchored by major retailers such as Woolworths, Kmart, Dan Murphy’s and ShowBiz Cinemas, in addition to 35 further retail tenancies.

“The strong pricing achieved is a function of heightened investor demand for quality convenience retail assets given their relative value and resilience in recent times, coupled with limited supply of opportunities in this asset class,” added Taylor.

The Delacombe property sits on a 6.5-hectare site and is placed in the Ballarat West Precinct Structure Plan (PSP) area and itself set to double in population over the coming two decades.

The PSP area spans 1,290-hectares that has been earmarked for growth, with around 920-hectares of net developable land to be utilised for residential use. The area is due to deliver more than 14,000 residences and at its capacity include a forecasted population in excess of 36,000 people.

“We are experience growing demand for quality sub-regional assets from a range of private and institutional capital sources, both domestically and offshore, which is driving more competitive pricing and yield compression,” said Hatcher.

According to JLL, there have already been $1.6 billion of sub-regional centre transactions over 2021, while over the 2020 full year there was only $687 million.

In September, BIS Oxford Economics called sub-regional yields as peaking at 6.9%, as at the time both Sydney and Melbourne were waiting to emerge from long lockdowns and resulting retail limitations.

SCA itself reported relatively stable results for Q1 FY22, with tenants seeing positive annual turnover, with growth of 2.1%, despite these lockdowns.

“Private investors and syndicates have been the dominant buyers in the sub-regional sector this year, however appetite from institutional investors is returning for best-in-class assets – a trend we expect to continue into 2022,” concluded Taylor.

SCA itself reported relatively stable results for Q1 FY22, with tenants seeing positive annual turnover, with growth of 2.1%, despite these lockdowns.