Sentinel defies current climate and raises $20m in mall sale

Riverdale Shopping Centre was the first acquisition for the open-ended Sentinel Countrywide Retail Trust when it was purchased from Charter Hall in October, 2014, for $14 million.

Sentinel managing director Warren Ebert said the Dubbo shopping centre was almost fully leased, with Woolworths last year taking up a five-year option.

“The decision to sell was based on Sentinel’s strategy of buying at an opportune time and then selling based on our view of the market,”Mr Ebert said.

The sale comes as investors remain cautious on the outlook for the overall retail sector. While landlords of general specialty stores are under pressure to offer rent relief or face store closures, the food-anchored malls are seeing continued growth.

Due to the panic shopping at supermarkets, there will be a spike in sales, although that will be only in the short-term, experts have warned.

Macquarie Equities Macro Strategy team expects the coronavirus to weigh on retail spending from February, including through lower inbound tourism.

“Notwithstanding the bushfire-related impact, consumer spending trends remain subdued overall,” the strategy team said.

Steven Lerche, national director, retail investments at Savills Australia, who negotiated the Riverdale sale, said the transaction should provide the necessary confidence “there is a market for regionally located neighbourhood shopping centre investments with strong underlying convenience retail characteristics”.

“Despite the challenging retail environment, assets are still transacting, particularly neighbourhood centres, largely due to their affordability and exposure to non-discretionary retail. Neighbourhood centres and freestanding investments remain the preferred sub-class, with a strong non-discretionary presence,” he said.

Mr Lerche said the majority of neighbourhood centres are not prone to the effect of online retailing as they provide services and mostly attract customers to shop at the centre.

“The retail sector has taken a lot of criticism due to the head winds of online retailing and shrinking retailer confidence. However, online retailing clouding investors’ views of the longevity of the shopping centre is being skewed by negative publicity and a complacency in the marketplace,” he said.