Elanor Investors Group and its investment partner Atlas Advisors have settled the purchase of the Fairfield sub-regional shopping centre Neeta City for $85.3 million.
Elanor and Atlas form the Fairfield Centre Syndicate, which acquired the property in March. Atlas is a private equity firm backed by Chinese high net worth investors, particularly holders of significant investor visas.
The sale of the 24,750-square-metre property closed at a passing yield of 7.8 per cent, well below its replacement cost.
It is 300 metres from the train station and there are significant redevelopment opportunities on the property’s 2.2-hectare site area.
The centre is anchored by a Woolworths supermarket and a Big W discount department store. It has more than 70 specialty non-discretionary retailers, making the centre a defensive asset, and correlating with an investment thesis favoured by both Elanor and Atlas.
Elanor co-head of real estate Michael Baliva said the property could yield more productive commercial uses.
“Our strategy is focused on enhancing both the income and capital value for our syndicate capital partners,” he said.
Atlas’ previous deals with Elanor include the $125.25-million prized A-grade office space WorkZone West at 202 Pier Street in Perth, purchased in 2018.
The pair are planning to expand their investment mandate, seeking not just defensive assets such as Neeta City but also more counter-cyclical properties like premium and A-grade office towers in Perth.
Atlas executive chairman Guy Hedley said the Perth premium office sector would offer gains, as vacancy fell, business improved and mining companies returned to the market.
Non-mining companies have already swooped on premium office leases that previously eluded them due to the stranglehold of mining operators. But now they compete strongly for the space, albeit with incentives that will fall in due time.
With the return of mining companies, the Perth premium office sector could soon see strong competition, Mr Hedley said.
Evidence lies in the falling vacancy of A-grade assets such as WorkZone West. Vacancy has dropped to 4.5 per cent from 6.3 per cent in the past year.
“Perth in particular is expected to outperform all major cities including Sydney and Melbourne in terms of commercial rental growth this year,” Mr Hedley said.
“The development of Perth’s nearby cultural precinct in Northbridge, short supply, higher yields and lower acquisition costs along with general improvement in market and economic conditions make Perth an ongoing attractive proposition,” he said.
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