Fort Street Real Estate buys $100m Melbourne mall for new fund
Real estate fund manager Fort Street has bought Keilor Central, a sub-regional shopping centre in Melbourne for $113 million from ASX-listed Vicinity Centres as investor capital continues to pour into convenience-based retail assets.
The 19,700-square-metre mall and car park on a 9.1-hectare site on Taylors Road in Keilor Downs in the city’s north-western suburbs was acquired on an initial yield of 6.3 per cent and is almost fully occupied.
Alongside three anchor tenants Coles, Aldi and Kmart, there are 59 primarily convenience-based specialty tenants including the Commonwealth Bank, Australia Post, The Reject Shop, Vodafone, Specsavers, Hungry Jacks and KFC, as well as two pad sites.
The shopping centre is the first asset acquired for a new fund called Fort Street Real Estate Capital Fund IV, which launched in June with gross assets of $76 million and about $150 million to invest initially in retail, commercial and industrial assets.
Keilor Central was sold off-market by Vicinity Centres with the deal negotiated by Lachlan MacGillivray of Colliers International.
It had been held in an unlisted Vicinity-managed wholesale fund that is being wound-down. Another asset in the fund, Lidcombe Centre, in Sydney’s western suburbs, sold to a private investor in October for about $145 million,
Strategic location
Fort Street Real Estate Capital investment manager David Rogers said Keilor Central was a strongly performing, convenience-based retail offering and in strategic location in a part of Melbourne with limited competition.
“Furthermore, there are a number of ways that we believe we can enhance the value of the asset,” Mr Rogers said. These include repositioning it, improving the tenancy mix as well as “longer-term opportunities to add value to the asset”.
Other property fund managers have been targeting opportunities in supermarket-anchored convenience malls, that are less exposed to the growth of online retailing and can be acquired on attractive yields.
This week, ASX-listed Charter Hall Retail REIT bought Campbellfield Plaza, a subregional mall in metropolitan Melbourne anchored by Coles, Kmart, Aldi and Officeworks, for $74 million on a yield of 6.5 per cent.
Fund manager Real Asset Management (RAM) recently bought the Gold Coast shopping centre Coomera Square for $58.5 million at a yield of 7.15 per cent, its 13th neighbourhood retail centre.
