Private developers spend $75m on Melbourne malls
The sale of two suburban Melbourne malls has delivered contrasting outcomes for their respective vendors, after a Home Consortium large-format outlet in Knoxfield sold well above its book value for $45 million, while Chinese investors took a substantial haircut on a neighbourhood mall in Mornington that traded for just over $30 million.
HomeCo Knoxfield, a 13,603-square-metre homemaker centre on a 4.34-hectare site in Melbourne’s eastern suburbs anchored by Amart Furniture, sold on a 5 per cent yield to private investment and development company Troon Group.
The centre, one of the last remaining assets held directly by Home Consortium, was valued at $34.9 million as of December 31 and at a book value of 6.25 per cent.
The incoming buyer, Troon Group, is a subsidiary of Ballarat construction firm H.Troon Group. Last year, Troon Group formed an equity partnership with real estate financier MaxCap to undertake commercial projects in Melbourne and split the profits.
The sale of HomeCo Knoxfield was brokered by Justin Dowers and Kevin Tong from Stonebridge Property Group, who said the large-format retail sector was riding the tailwinds of the industrial property boom.
With prime industrial yields now trading at well below 4 per cent, Mr Dowers said the attractiveness of the typical LFR asset, which shares similar attributes with logistics, has not gone unnoticed by savvy investors.
Mr Tong said the underlying 4.3ha of industrial-zoned land had increased in value significantly over the past few years, which made the Knoxfield investment “a lot more attractive”.
In Mornington, a syndicate of Chinese investors were not so lucky, after Woolworths indicated it would not be renewing its lease at the Mornington Village Shopping Centre.
The imminent loss of Woolworths as anchor tenant from the two-level, 7963sq m property resulted in a sale of just over $30 million, according to market sources, after it last traded for $39 million in June 2018, a 23 per cent fall in value.
It has been acquired by joint venture partners Angelo Property Group and Rathstation Group. They intend to redevelop the site into a mixed-use offering that could include a residential component.
The sale of Mornington Village was also brokered by Mr Dowers and Mr Tong, who both declined to discuss the price or yield achieved on the sale, citing a confidentiality agreement.
“The asset represented a value add-repositioning proposition given Woolworths is intending to vacate in September and Aldi is on a month-to-month lease,” the agents said.
Mr Dowers said a new development on the 1.3ha commercial site in the centre of Mornington had the potential to attract top-tier tenants across a multitude of sectors.
He said the sale of Mornington Village was the first Victorian neighbourhood shopping centre transaction for 2022.
Recent sales include the Meadow Heights Shopping Centre in Melbourne’s outer north, which sold to a Sydney investor for $22 million on a 6.6 per cent yield in December.