Weekly Transaction Update - 24th May
This week we recorded 20 major transactions worth $1.3bn
Perron Group take 50% of Westfield Burwood
Scentre has stepped up efforts to fortify its retail portfolio, selling down a half stake in Westfield Burwood to the Perron Group in $575m deal announced this week.
Westfield decided to off load the interest in the Centre as it offered little further development potential and additional land was unlikely to be acquired, yet it remained of sufficient quality for capital partners to consider.
The Perron Group, founded by late Perth billionaire Stan Perron, is paying a 4.1 per cent premium to SCentre's book value, reflecting a yield of circa 4.8%.
Westfield Burwood is centrally located within Sydney’s Inner West, approximately 12 kilometres from the CBD. According to Shopping Centre News, the centre caters to a trade area population in excess of 464,000 residents and is ranked 43rd in Australia with total retail sales of close to $500 million and customer visitation of more than 14 million per annum.
Scentre Group and Perron Group have other longstanding co-ownerships including Westfield Woden, Westfield Airport West and Westfield Geelong.
Proceeds from the deal will initially be used to repay debt, and Scentre’s chief executive Peter Allen said the returns would generate further capital for the retail landlord to pursue its strategic objectives including its $3 billion in redevelopment opportunities across its 41-asset portfolio.
Anton Capital expected to land Oxford's Brisbane assets
Anton Capital is likely to become the highest bidder for Oxford Property's Brisbane assets in what continue to be the year’s largest property selldown.
Oxford's two Brisbane assets at 239 George St and 15 Adelaide St are set to trade for circa $225m. The two assets were held on Investa book as at June 2018 at $193M. Oxford paid a 2.2% premium to the June 2018 NTA, meaning a sale at $225M would reap a Oxford a 14% capital gain in less than 12 months.
The larger building at 239 George Street was refurbished in 2006 and spans a lettable area of about 24,234sqm with ground-floor retail space and 30 levels of office space. An apportionment of the sale price based on the Investa reported book values would suggest that 239 George Street would trade at $6,400/sqm and a 6.25% yield.
The adjoining building in Adelaide Street comprises 11,605sqm and a sale at the reported figure would likely reflect $6,008/sqm and a 7.0% reported yield.
Cushman & Wakefield is an adviser on the whole portfolio with CBRE on the Brisbane assets
Acqualand Exit Macquarie Park Commercial asset
Aqualand have offloaded a commercial asset in Macquarie Park after a 3 year holding period, pocketing a 30% capital gain and a 6% yield.
Aqualand acquired the building at 40 Talavera Rd for $54m in July 2016 from Altis Property Partners at a yield of circa 5.7%. For Aqualand, the acquisition was a short term diversification from its established residential development ambitious. The group continue to hold a range of commercial assets in North Sydney including 132 & 146 Arthur St and 15 Blue Street.
Aqualand have now agreed terms to sell the 2.5ha Macquarie Park site to LaSalle Investment Management for $70m and a reported yield of circa 6.0%.
The 2.5 ha site contains 13,251sqm of commercial space which is leased to Edwards, BAE Systems with a 4 year WALE.
The property was sold by Knight Frank.
McMullin Group in Industrial Land grab in Donnybrook
As the industrial market continues to tighten across Melbourne, the McMullin Group have acquired land at 45 Donnybrook Rd, next to the Hume freeway at Mickleham.
The 67 hectare site, previously owned by Shell, was marketed by CBRE. The purchase price has not yet been disclosed however reports suggest that based on market rates of $60/sqm, the transaction could be worth approx $40m. The actual price is likely to be less than this as almost half of the site has native vegetation and environmental constraints and is unable to be developed.
The McMullin Group have recently sold out its Northpoint Enterprise Park (127ha) and have substantially progressed their ConnectNorth Business Park in Epping.
MAB Corporation in a JV with the Gibson Property Group control most of the employment land in the Donnybrook Rd precinct and were an under bidder for the Shell site. In 2017, MAB acquired 131ha of industrial and residential land from AMP Capital for $53/square metre, adding to their 330ha at Merrifield Business Park.
Dulux were the first company to be established at Merrifield Business Park, with the completion last year of a $165 million water-based paints factory on a 17 ha site. MAB have sold approx 50ha of industrial lots in the Business Park.
The Federal Government has also developed a new national Quarantine Facility on 144ha of land which it acquired off AMP Capital in 2012.
4 Neighbourhood Convenience Retail Centres sold
Interest is strengthening in the smaller end of the Neighbourhood Centres as evidenced by the recent sale of 4 centres for a total of $92.7M.
In what is becoming known as "Neighbourhood Convenience Retail" (NCR) these Centres are differentiated to their larger "Neighbourhood Centre" cousins by being predominantly comprised a major supermarket with just 1- 15 tenancies fronting a car park.
Typically being developed by Woolworths, Coles and a number of specialty developers, investors are being attracted to the lower risks to the asset class than is offered by the larger retail centres which are at risk to changes in discretionary spending habits.
Neighbourhood Convenience Retail Centres are typically passed over by institutional capital due to the lower capital capable of deployment, however the investment characteristics of the sub sector offer a compelling story as a commercial grade asset; long leases to high quality tenants, quality locations, income growth and liquidity.
The largest of these NCR assets to trade this week was the Coles Kedron Centre was sold for $34.2M on a cap rate of 5.0%. The Centre which comprises a brand-new, “state of the art” full-line Coles Supermarket, Liquorland, a specialty Cafe and a Coles Express Service Station. The Centre offered a WALE security of 14.73 years by area.
Woolworths also sold their Lara and Carlewis NCR assets, both in Victoria. The Lara Centre was sold for $21M at a 6.1% yield and the Carlewis Centre was sold for $17M at a 6.5% yield. Both Centres were anchored by a full line supermarket and with a mix of convenience based specialty stores adjoining the supermarket.
The fourth NCR recently sold was the Flagstone Village (QLD) a 12,700sqm site comprising a 7-11, IGA Supermarket, Snap Fitness, BWS, Dominos, Vet Love and a Terry White Chemist. The Centre was sold on a 5.96% cap rate for $20.5M to a private investor.
We expect interest in this sub-sector will remain strong.
Review our other transaction data at ReSourceData.
* indicates unconfirmed price or apportionment of a portfolio sale