EG's Core Plus Fund has sold its NorthWest Plaza Shopping Centre in Everton Park, QLD for $42.5M, reflecting a marginal capital loss on its investment since in 2014.
The neighbourhood centre sits in an established trade area, 12km north of the Brisbane CBD, where the household income is 13% higher than the greater Brisbane average.
The 9,489sqm centre is anchored by a Woolworths supermarket on a 20-year lease, expiring in May 2032, alongside 21 specialty stores and an early childhood centre. The weighted average lease expiry for the centre is 6.6yrs. The centre sits on a 3.1ha site with 450 cars in a split level car park.
EG Funds Management competed against 11 other bidders for the asset in 2014, paying $41.5M on a yield of about 7.7%. The group invested a further $2.4m to improve the tenancy mix, the entrance, paving, and plant & equipment and were able to increase the fully lease net income over the period by around 12% to $3.584M per annum.
The Centre is surrounded by competition, with 5 other Woolworths Supermarkets and 6 Coles Supermarkets within a 3.5km radius. With limited sales growth potential and heavy competition, some investors would struggle to see anything other than average rental growth in the short to medium term.
The Centre traded on a yield of just 8.43% to Acure Asset Management, a western Australian syndicator. Acure are forecasting an 8.9% year 1 distribution and a 10.3% IRR.
The Centre was the last of the assets in the EG Core Plus Fund to be sold providing a net returns of over 20 per cent across all seven assets – four office properties, one business park, one industrial property and North West Plaza.