Sydney’s Rockdale Plaza defies retail gloom with $142m sale
Charter Hall’s listed retail trust has snapped up Rockdale Plaza in Sydney’s south for $142 million and tapped the market for $150 million as investors back the future of well-located retail centres that can survive the onslaught of e-commerce.
The raising, being handled by investment bank UBS, was at a fixed price of $4.51 per share, a 3% discount to the stock’s closing price last Friday, indicating that listed investors are behind the Charter Hall-run fund’s strategy of switching to larger centres.
The group bought Rockdale Plaza from City Freeholds and has also trimmed about 10 smaller centres from its portfolio over the last two years.
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JLL’s Simon Rooney brokered the sale of the dominant, convenience-based Sydney subregional shopping centre to the Charter Hall Retail REIT on a capitalisation rate of 6.25%.
The sale comes at time when major listed groups Vicinity Centres, Stockland and Lendlease are moving to sell centres.
Rooney says that while the focus for some institutions has been on disposals, the Charter Hall purchase shows A-REITs will continue to target and selectively acquire quality retail assets as they re-weight towards higher-growth metropolitan locations.
Investors tend to chase metropolitan shopping centres due to their exposure to strong population growth and rising urban density, particularly in Sydney and Melbourne.
Rockdale Plaza has been sold for $142 million.
“Investors see value in the retail sector given the recent shift in asset pricing and attractive yields,” he says.
Stockland and Vicinity have marked down the value of some centres, indicating they are keen to offload them.
Rooney says a number of groups are making “tactical retail acquisitions” and he expects more investors to consider the relative value of retail purchases this year.
The 21,331sqm Rockdale Plaza sits on the Princes Highway and is anchored by a strongly performing Woolworths and Aldi supermarkets, a Big W, together with seven mini-majors, 46 specialties and parking for 907 vehicles.
The centre is defying the gloom in the retail market and its moving annual turnover lifted by 5% lift to $180.8 million, underpinned by strong speciality productivity of $11,703 per sqm.
The fund reaffirmed fiscal 2019 operating earnings growth of 2%, in line with its previous guidance, and a non-underwritten unit purchase plan is expected to raise up to $10 million.
Charter Hall’s retail chief executive Greg Chubb says Rockdale Plaza is a high performing centre.
“Underpinned by supermarkets and non-discretionary food and service-based uses, the acquisition aligns with the REIT’s investment strategy and enhances portfolio metrics to ensure we continue to deliver long-term sustainable growth in earnings for investors,” he says.
This article originally appeared on www.theaustralian.com.au/property.
