Altis Property Partners have sold a convenience-based, large format retail centre in Sydney for $46 million – a record NSW fully leased yield of 5.46%. Harry Bui and James Wilson of Colliers International in conjunction with Carl Molony and Phillip Gartland of Stonebridge Property Group managed the sale of the 9,647m2 Centre to an offshore developer.
Located at 300 Parramatta Road Auburn, the property comprises five premium LFR tenancies including Officeworks, BCF, Decathlon and RSEA, fulfilling everyday work and leisure needs, generating approximately $2.5 million fully leased income annually. The centre is ideally located at the geographic heart of Sydney, just 4km south east of the Parramatta CBD and 19km to the west of the Sydney CBD and is positioned on a high-profile 1.8 ha corner site with exceptional exposure to Parramatta Road.
Shaun Hannah, Executive Director of Altis Property Partners stated how Altis saw an initial value add opportunity when originally acquiring the asset.
“After purchasing the Centre in 2014 for $21 million, we implemented a major redevelopment scheme to revitalise the Centre. In 2018, construction of the refurbishment was completed which immediately reaped benefits. National and international retailers were attracted to the Centre on long term leases “, Hannah said.
Harry Bui, National Director, Investment Services at Colliers said that there was increased competition from offshore groups with mandates for quality commercial investments within high profile Sydney metropolitan locations, which is similar to trends historically experienced in Melbourne and Brisbane.
Bui said, “We are seeing a trend of both offshore private and institutional capital sources turning to Sydney; historically the city has been dominated by domestic investors outside of the Sydney CBD, thus placing increasing pressure on local parties to perform.”
James Wilson, National Director, Retail Investment Services at Colliers noted that the International Expressions of Interest campaign for 300 Parramatta Road saw aggressive bidding from a combination of institutional and private capital targeting the brand new Large Format Retail Centre given the assets combination of high profile national tenancy profile, attractive lease structures and strategic long term land holding.
“The campaign highlighted the strong market depth for quality Large Format Centres with investors attracted to the sectors value proposition created by relatively low rental rates, long term leases and fixed annual rental reviews”. said James Wilson, National Director, Retail Investment Services at Colliers International.
Carl Molony, Director, Stonebridge noted the limited supply of quality Sydney retail and low interest rates is culminating in stronger pricing and shorter transaction timeframes.
“There was a considerable shift in investor sentiment in the second half of the 2019 calendar year. We have witnessed higher volumes of offers and significantly shorter due diligence periods, with a number of transactions, including 300 Parramatta Road, concluding with no formal due diligence period and very strong pricing”, Molony said.
