OzProp snaps up Rothwell Central as large format retail takes off

Rothwell Central is a single level large format retail development with a total gross lettable area of 11,015sq m built on a 39,350sq m site.

Boutique investment group OzProp has snapped up Rothwell Central, a large format retail development in the suburb of Rothwell, in Brisbane’s northern suburbs, for $41m.

The purchase continues the momentum in the sector which has held up relatively well in the face of the broader slowdown in property values.

OzProp has picked up the property at 746-757 Deception Bay Rd from Centa Rothwell, with the acquisition showing a passing yield of 7 per cent.

JLL’s Jacob Swan brokered the off-market sale which showed a substantial premium on the last trades.

Centa Rothwell bought the property in October 2015 for $30,688,888 from a fund managed by Sentinel Property Group which had bought it in a receiver’s sale in 2011 for $25.75m.

OzProp will hold the property for the longer term as the trust holding the centre will spin off an annual distribution of 6.5 per cent, which could be sweetened via development of an area at the front of the property.

OzProp has raised $25.75m to back the deal and has billed its purchase as a value-add opportunity that will see it lease up vacancies and reset market rents. There is also the opportunity for further development of 62.3 per cent of the gross lettable area.

Rothwell Central is a single level large format retail development with a total gross lettable area of 11,015sq m built on a 39,350sq m site.

The centre commenced trade in 2005 and comprises 29 retail tenancies, driven by national retailers, including BCF, Super Cheap Auto, Officeworks, Dominos, Battery World, Mr Toys Toyworld, Choices Variety, Planet Fitness and Nutrition Warehouse forming about two-thirds of gross passing income.

The six mini majors represent 62.3 per cent of the gross lettable area while the centre’s Weighted Average Lease Expiry by area is five years. The centre is being purchased at $3722 per metre of the net lettable area which is considered replacement cost.

The property has about 3.1 per cent vacancy which is not included in the passing yield. The potential additional rental income capitalised at the purchase yield provides for an additional $2.4m in value.

OzProp Capital is an active trader. It last year sold the former long-term home of jewellers Michael Hill International in the Metroplex on Gateway estate to investment manager Alceon QLD for $13.65m.

It also offloaded a shopping centre in the Townsville suburb of Kirwan to a Melbourne ­investor for $7.75m.