Stronger SA economy is attracting new investor interest with a private South Australian investor paying $12.95 million on a 7.57% yield for Moelis Australia’s Hollywood Plaza Large Format Retail Centre at Salisbury Downs in Adelaide’s outer north.
Moelis Australia Head of Real Estate Asset Management, Chris Monaghan, was pleased with the sale of a strong investment grade asset.
“The transaction of the property with its solid investment characteristics at an attractive yield speaks to the strength of the South Australian economy and retail property market,” Monaghan said.
The fully leased, 8,080m2 (GLA) centre, returns an annual net income of $980,000 from six separate tenancies including Cheap as Chips, Supercheap Auto, Salvation Army and Anytime Fitness, with a WALE of 5.8 years.
According to CBRE Director Investments Justin Dowers who brokered the Expressions of Interest deal with Mark Wizel, Kevin Tong, and Michael Fenton, the property attracted significant local and international interest eliciting seven formal offers.
“Enquiry was quite strong for an asset which offered a number of investment attributes including the centre’s full occupancy, the integrated nature of the six tenancies and the associated drawing power, along with the space available for future expansion.”
“The additional security offered by the fixed annual increases in each of the six leases, the centre’s strategic location opposite the Hollywood Plaza shopping centre – home to Woolworths, Coles, and Target – and significant main street exposure were also important factors,” Dowers said.
Wizel said the 3.7 hectare site presented investors with significant value-add or expansion opportunities, including mixed-use development, due to the low 22% site coverage.
“Investors were therefore offered an asset with a strong existing income stream and the knowledge that the land component provided potentially significant additional income prospects down the track.
“There is no doubt that the future development upside was important in appealing to a wider group of potential purchasers,” Wizel said.
Dowers said some positive news regarding the South Australian economy was also noted by purchasers.
“South Australia is currently experiencing a period of growth buoyed by significant investment in key sectors including the ship building program and the $5 billion investment in the largest teaching hospital in the Southern Hemisphere, projects which are expected to benefit the state for decades to come.
“That is the sort of economic news that attracts investment in property especially quality retail assets such as the Hollywood Plaza Large Format Retail Centre,” Dowers said.
