Pandemic cuts pricing of Woolworths-anchored mall
Listed real estate fund manager APN Property Group has found a buyer for its Woolworths-anchored Coburg Hill Shopping Centre in Melbourne’s north, but at a price well below pre-COVID-19 expectations.
The 4419sq m mall at 153-157 Elizabeth Street was put up for sale in late February – two weeks before the World Health Organisation declared a global pandemic – with price expectations around $25 million.
Selling agents CBRE said a Sydney-based private investor with an overseas partner had agreed to pay $21.3 million for the strata-title neighbourhood centre on a passing yield of 6 per cent.
APN paid $18.9 million for the newly completed mall in February 2015. It was held in the unlisted Coburg North Retail Fund and had a December 2019 book value of $20.5 million.
APN decided to put it up for sale – ahead of the fund’s maturing date at the end of 2021 -after receiving “a number of unsolicited approaches to purchase the asset”.
Its listing also followed a $875,000 write-down of the site’s value after APN objected to a 48 per cent increase in the centre’s land tax assessment by the Victorian State Revenue Office.
Coburg Hill is the second Melbourne neighbourhood shopping centre to sell this year, both through CBRE.
In April, Woolworths sold the Keysborough South shopping centre for $33.13 million on a yield of 5.4 per cent. It was bought by a local investor.
CBRE’s Justin Dowers, who negotiated the sale of Coburg Hill with Kevin Tong and Lewis Tong, said while yields for commercial property generally appeared to have softened with the onset of COVID-19, both the Coburg and Keysborough properties “had sold on very respectable yields that were in line with pre COVID-19 prices”.
Coburg Hill shopping centre is about 10 kilometres from Melbourne’s CBD. Alongside Woolworths, which accounts for 59 per cent of the centre’s annual net income of $1.4 million, other tenants include cafe chain Degani, Regency Pharmacy and Jetts Fitness.
