Investor sentiment for prime retail assets has been highlighted in the sale of HomeCo Box Hill, one of Melbourne’s most significant retail transactions of the year, acquired by private investors for $67.5 million.
The asset was sold on behalf of HomeCo Daily Needs REIT in an off-market sale brokered by JLL’s Senior Director of Retail Investments, Stuart Taylor and Director of Retail Investments, Tom Noonan.
HomeCo Box Hill, is a high-profile Large Format Retail Centre (LFR), anchored by tenants such as Chemist Warehouse, BCF, Petbarn and Decathlon, located on Middleborough Road, in Box Hill South 14km east of the Melbourne CBD.
The asset provides a highly strategic 3.96 Hectare landholding, currently zoned Industrial 1, and forms part of a strong retail precinct immediately adjoining Bunnings Warehouse. The centre provides 13 tenancies, a GLA of 13,903m2 and a weighted average lease expiry of 6.5 years (by income).
The sale price reflects an initial yield of 5.5%, an improved building rate of $4,858/m2 and a land rate of $1,705/m2.
HomeCo Box Hill is located on 14km east of the Melbourne CBD
Taylor said: “HomeCo Box Hill represents a strong performing LFR asset which is underpinned by an exceptional land holding in a prime location – such attributes are what many of the most aggressive capital sources are looking for in the current market.”
“In the current higher interest rate environment, investors are seeking either high yielding assets or properties which have alternative levers to drive capital appreciation, such as reversionary upside in land value.”
“While transaction volumes remain subdued in the retail sector, there is significant demand from well capitalised private investors. These buyers are seeing this time in the cycle as an opportunity to secure prime assets which rarely become available for purchase from long-term holders,” said Taylor.
The sale of Box Hill is the largest Victorian LFR transaction for the second half of 2023, and third largest deal nationally for the full year.
The transaction follows other notable LFR deals brokered by JLL in 2023, including the sale of HomeCo Midland, WA acquired by PWD for $74.75 million and HomeCo Epping, VIC which was acquired by Forza Capital for $70.25 million.
