"A good time to sell": $70m of retail property listed for sale by Charter Hall, Elanor

In Hobart, the Elanor Retail Property Fund is selling its Big W-anchored Glenorchy Plaza, which has $20 million-plus expectations while in Melbourne, the Gilbert family is selling the Aldi-anchored Northcote Central neighbourhood mall for more than $30 million after two decades of ownership. Both are being marketed by CBRE.

“It’s a good time to be selling these assets,” said Grant Berry, a director at equities and property securities specialist fund manager SG Hiscock.

“Private investors and syndicates have been active in the market and have been willing to acquire assets at sharper prices than their current valuations ” Mr Berry said.

As evidence of this, he pointed to a number of recent low-yield results, including a Dan Murphy’s in Melbourne, which sold for $22.52 million on a record low yield of 3.2 per cent, a Coles supermarket in Warrnambool in regional Victoria, which sold for $14 million on a 5.7 per cent yield and a freestanding Woolworths supermarket in Mackay, which sold for $18.75 million on a 5.8 per cent yield.

All sold as part of a CBRE portfolio auction, which generated over a $100 million in sales and attracted over 300 attendees and 63 registered local and offshore bidders

“Our team are continuing to see yields for supermarkets and shopping centres sharpen substantially on a national basis, especially those with land in metropolitan locations,” said CBRE retail investments director Mark Wizel.

Heath Crampton, national director of retail valuations at M3 Property, said he expected continued levels of demand for retail property to remain strong throughout 2017 and into 2018 provided the economy did not deteriorate.

“Purchasers continue to seek retail assets featuring a strong performing anchor tenancy profile with a long weighted average lease expiry complemented by a strong tenancy mix or value-add proposition.

“However, we consider the firming of investment yields that has occurred over the past 24 months will start to taper off as investor return hurdles may not be achieved and potential acquisitions become dilutionary to their existing portfolio,” he said.

Heightened demand conditions, and concerns about the impact online giant Amazon might have on the retail market, has driven major divestments by mall giant Vicinity Centres, and Charter Hall Retail REIT.

Others like syndicator Sentinel Property Group are selling a number of large format retail centres, having bought into the sector in the low point of the cycle. Also selling retail property are Coles and Woolworths who are divesting a number of supermarkets.

“The public [A-REIT] market has been more reactive [to the threat from Amazon] which is why the A-REITS are trading at below net tangible asset values. But I think it has been overplayed,” Mr Berry said.

Mr Berry said it made sense to sell out of their non-core malls, lower their gearing and then invest in buying back their own stock at a discount.