Sentinel Property Group has sold a high performing regional neighbourhood shopping centre with expansion potential (STCA) at Dubbo in central west NSW for $20.17 million.
The Woolworths and Reading Cinemas anchored Riverdale Shopping Centre in Macquarie Street, Dubbo, was sold to a private investor on a yield of 7.26%.
Riverdale Shopping Centre was the first acquisition for the open-ended Sentinel Countrywide Retail Trust when it was purchased from Charter Hall in October, 2014, for $14 million.
Sentinel Managing Director Warren Ebert said the Dubbo shopping centre was almost fully leased, with Woolworths last year taking up a five year option.
“This has been an excellent asset for Sentinel with Dubbo being a key transport and logistics hub servicing a huge area of NSW with a retail catchment of about 200,000 people plus visitors,” Ebert said.
“The decision to sell was based on Sentinel’s strategy of buying at an opportune time and then selling based on our view of the market. Riverdale Shopping Centre is in the main street of Dubbo and as well as Woolworths it has the only cinema within 100km, making it an entertainment destination not only within the main trade area but also the broader region”, he said.
The high performing regional neighbourhood shopping centre has expansion potential (STCA)
“One of Sentinel’s points of difference in the competitive retail sector is its hands-on management of its properties by experienced onsite executives with specialist retail skills”, Ebert said.
He continued, “This value-add expertise is evident across our assets in the countrywide retail trust which are managed aggressively while we have also undertaken refurbishment and expansion projects.”
Steven Lerche, National Director, Retail Investments at Savills Australia, who negotiated the Riverdale sale, said the transaction should provide the necessary confidence there is a market for regionally located neighbourhood shopping centre investments with strong underlying convenience retail characteristics.
“Despite the challenging retail environment, assets are still transacting, particularly neighbourhood centres, largely due to their affordability and exposure to non-discretionary retail. Neighbourhood centres and freestanding investments remain the preferred sub-class, with a strong non-discretionary presence,” he said.
Lerche said the majority of neighbourhood centres are not prone to the effect of online retailing as they provide services and mostly attract customers to shop at the centre.
“The retail sector has taken a lot of criticism due to the head winds of online retailing and shrinking retailer confidence. However, online retailing clouding investors’ views of the longevity of the shopping centre is being skewed by negative publicity and a complacency in the marketplace. More progressive thinking about tenancy mix, attracting retailers that add to the overall experience and support the shopper’s needs is paramount”, he said.
Lerche said, “With the knowledge of interest rates being lower for longer and the volatility of the stock market, property remains a safe haven for long term investors. This off market sale follows the sale of Erindale Shopping Centre in Canberra that Savills Australia also transacted ‘off market’ at the end of January.”
Riverdale Shopping Centre offers a total lettable area of 6,156 m2, including 17 specialty outlets. It is situated on a high-profile location along Macquarie Street with parking for approximately 299 vehicles.
Established in 2010, Brisbane-based Sentinel has a total national portfolio of more than 50 retail, industrial, office, land, tourism infrastructure and agribusiness assets in Queensland, New South Wales, Victoria, Western Australia, the Australian Capital Territory and the Northern Territory with a total value in excess of $1.2 billion.
