Coffs Harbour shopping centre an $83m prize
Sydney-based Fort Street Real Estate Capital has snapped up the Toormina Gardens Shopping Centre in Coffs Harbour from the listed Vicinity Centres and Challenger in an $83.3 million deal.
The group bought the centre for its third direct real estate fund, which has now completed its investing after last year also picking up an office complex in Sydney’s Mascot.
Challenger, acting on behalf of a Middle East investor, believed to be Abu Dhabi Investment Corporation, bought half-stakes in six centres either owned directly by Vicinity forerunner Federation, or jointly owned by Federation and investors in its syndicate business, in 2013.
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Toormina Gardens is a major convenience-based centre in Coffs Harbour on the mid-north coast of NSW. It has a lettable area of 21,200sqm, with a large on-grade car park over a site area of 5.8ha.
The fund acquired the centre on a fully leased yield of 7%. It is anchored by Coles, Woolworths and Kmart and primarily convenience-based with three mini-majors, 40 specialty tenants and four kiosks.
Occupancy is at 99% with national retailers representing 80% of total income, including Best & Less, The Reject Shop, CBA, ANZ, Australia Post, Blooms Chemist, KFC, Subway, Donut King, Optus and OPSM.
Unlisted funds are driving acquisitions in the retail sector at present and are by far the dominant buyer group
David Rogers, director of investments for Fort Street Real Estate Capital, says Toormina Gardens is a quality addition to complete the investment of Fund III. “The asset is performing strongly and offers potential to improve in the medium to long-term,” he says.
Toormina Gardens is the main shopping centre in the Coffs Harbour southern trade area and Rogers says there is an opportunity to reposition and further strengthen the convenience offering through active asset management and a focused leasing strategy.
JLL’s Simon Rooney handled the transaction and says the sale is another example of the continuing trend of REITs selling down smaller assets to reinvest capital into either new opportunities or opportunities within their existing portfolio.
“We expect REITs to continue to adjust their portfolio to reduce risk and efficiently redeploy capital,” he says. “Small subregional shopping centres which are largely food, service and convenience-based remain highly sought after.”
JLL analysis shows the assets are trading at record low yields as transactions of subregional centres dropped to $1 billion last year.
“Unlisted funds are driving acquisitions in the retail sector at present and are by far the dominant buyer group,” Rooney says.
This article originally appeared on www.theaustralian.com.au/property.
