In a year with reduced investment volumes across global capital markets, Charter Hall Retail (CQR) has divested a Melbourne Sub-Regional shopping centre in a $134.5 million deal that reaffirms investor demand for the sector.
Rosebud Plaza, a Sub-Regional centre anchored by Woolworths, Coles, Kmart and Dan Murphy’s, is located in the growing Mornington Peninsula region of Victoria. Charter Hall recently undertook a substantial refurbishment to further develop a sense of belonging, brand vision and enhance the retail offering for the community.
In December, the centre launched a fresh look for Woolworths relocated to within the Plaza, refurbished amenities, mall and ambience upgrades, and changes to the north-western carpark. Further to this, the centre welcomed a brand-new Dan Murphy’s and BCF showroom.
The Rosebud Plaza transaction was exclusively handled by Nick Willis and Sam Hatcher from JLL Retail Investments Australia & New Zealand.
“We are in an environment where the underlying fundamentals of shopping centres have continued to improve, led by strong population growth and a lack of new floor space supply. This coupled with the relative returns available compared to other sectors is attracting a growing weight of capital both domestically and globally,” said Willis.
Rosebud Plaza is anchored by Woolworths, Coles, Kmart and Dan Murphy
While the buyer remains confidential, it has been confirmed that it is a private investor based in Sydney.
Willis adds, “While unlisted managers have been one of the most active buyers of shopping centres in 2023, the fourth quarter saw a significant increase in activity from private investors. In December alone we witnessed almost $700 million of shopping centres transact to private investors.”
Hatcher said: “The Sub-Regional sector is undergoing a bifurcation between core and non-core assets. Over the 12 months to December 2023, the initial yield spread reflected across national transactions ranges from 5.50% – 7.75%. In this higher interest rate environment, we have seen the managers who are reliant on distributions shift their focus to more regionally located assets in search for this spread.
“The formal on-market supply pipeline for shopping centres above $100 million was subdued throughout 2023, however, we anticipate this to significantly increase in 2024 and vendors take advantage of the investor demand,” said Hatcher.
Southgate Square, South Australia
Charter Hall Retail has also announced the contracted sale of Southgate Square, South Australia for $91 million.
Charter Hall Retail CEO Ben Ellis stated: “These sales demonstrate CQR’s on-going active asset management and focus on improving portfolio quality while maintaining balance sheet strength. The sale proceeds of $225.5 million less transaction costs, will strengthen the balance sheet optionality that CQR has traditionally had through the ownership of liquid convenience retail assets.”
Southgate Square is expected to settle in February 2024 and Rosebud Plaza in June 2024.
