Asian investors put faith in low-yielding bricks and mortar retail
Asian investors have seen value in bricks and mortar retail assets – even on yields as low as 4.1 per cent – after snapping up a Kathmandu-anchored retail centre on the edge of the Sydney CBD and a neighbourhood centre on Victoria’s Mornington Peninsula.
In the larger of the two deals, a private investor from South-East Asia picked up the DUO retail centre at the foot of the Central Park precinct in Chippendale on the city fringe for $26.1 million from Fortius Funds Management and SC Capital Partners.
Anchored by Kathmandu, Starbucks and six other tenants on a weighted average lease expiry of less than four years, the 1090 square metre centre sold on an initial passing yield of just under 5 per cent. Fully let, the centre will return 5.4 per cent.
Selling agents James Wilson and Harry Bui, of Colliers, said the expressions of interest campaign generated more than 120 inquiries from a diverse range of local and offshore buyer groups including institutional, private, and syndicate investors.
Mr Wilson said the centre’s proximity to the CBD and the emerging Tech Central precinct were some of its key attractions for investors.
A long way down the coast at Bittern on the Mornington Peninsula, mainland Chinese investors struck the lowest yield yet – 4.08 per cent – for an IGA-anchored neighbourhood mall, after buying the Bitternfields Shopping Centre for about $12 million.
The centre, which last sold for $6.3 million in 2015, includes a small-format IGA Supermarket and 12 specialty shops about 82 kilometres from Melbourne CBD.
Its sale through JLL’s Tom Noonan, Stuart Taylor, MingXuan Li and Jarrod Herscu follows the successful auction sale last week of 16 retail shops to private investors on yields as low as 2 per cent – well below returns available for risk-free government bonds.
“The strong pricing achieved is an injection of confidence in the Melbourne retail investment market, and confirms that investors continue to bid aggressively for well-leased shopping centre assets,” Mr Taylor said.
Joining these Asian-based investors, a local investor saw good value in a 4.9 per cent return on the Tannum Central Shopping Centre near Gladstone on the Queensland coast, which sold for $18.5 million.
Built in 2004, the 4403sq m centre is anchored by a Coles supermarket with 14 specialty tenancies.
It was offered for sale Sydney-based fund manager Whistle Funds Management, which acquired it in 2011,
Selling agents Peter Tyson and Jon Tyson from Savills said it was a record low yield for regional Queensland.
Having also sold the Woolworths supermarket in Narrabri, NSW, as well as the Coles-anchored Highfields Plaza, near Toowoomba, on yields below 5 per cent, Whistle Funds Management managing director Andrew Vize said the group had “sought to capitalise on the current favourable market conditions”.
