Altis Property has doubled it money with the sale of a large format retail site in Sydney’s west for $46 million, being a record yield of 5.46 per cent.
The tight yield highlights the flight to quality for non-discretionary retail assets. Woolworths is taking advantage of this sentiment with the sale of a range of assets across regional NSW and city areas.
The offshore developer bought the centre after Altis undertook a major redevelopment to revitalise it when it paid $21 million in 2014.
The 9647 square metre site at 300 Parramatta Road, Auburn, comprises five large format retail (LFR) tenancies including Officeworks, BCF, Decathlon and RSEA safety equipment and workwear, generating about $2.5 million in fully leased income annually.
Atlis Property’s executive director, Shaun Edwards said Altis saw an initial value add opportunity when originally acquiring the asset.
“After purchasing the centre in 2014 for $21 million, we implemented a major redevelopment scheme to revitalise the centre. In 2018, construction of the refurbishment was completed which immediately reaped benefits,” Mr Edwards said.
Harry Bui and James Wilson of Colliers International in conjunction with Carl Molony and Phillip Gartland of Stonebridge Property Group managed the sale of the centre. Colliers International is also selling the Woolworths Wadalba, Spring Farm and a site at Pyrmont, while CBRE are selling the Keysborough South Shopping Centre in Melbourne’s south-east.
Mr Bui and Mr Wilson said the campaign for 300 Parramatta Road saw aggressive bidding from a combination of institutional and private capital targeting the brand new large format retail centre given the asset’s combination of high profile national tenancy, attractive lease structures and strategic long term land holding.
“The campaign highlighted the strong market depth for quality Large Format Centres with investors attracted to the sectors value proposition created by relatively low rental rates, long term leases and fixed annual rental reviews,” Mr Wilson said.
Carl Molony, director, Stonebridge said the limited supply of quality Sydney retail and low interest rates is “culminating in stronger pricing and shorter transaction timeframes”.
“There was a considerable shift in investor sentiment in the second half of the 2019 calendar year. We have witnessed higher volumes of offers and significantly shorter due diligence periods, with a number of transactions, including 300 Parramatta Road, concluding with no formal due diligence period and very strong pricing,” he said.
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