Melbourne based fund manager Fawkner Property has acquired the Mount Pleasant Centre in north Queensland for $162.5 million amid strong investor demand for sub-regional shopping centres.
The centre is recognised as one Australia’s best regionally located sub-regional shopping centre assets and attracted competitive buyer interest, with the sale price reflecting a net passing yield of 6.46% and fully leased yield of 6.55%.
CBRE’s Simon Rooney, together with James Douglas, negotiated the sale of the Mackay asset for Vicinity Centres, acting on behalf of a mandate client.
Rooney noted that the centre’s strong trading performance, dominance within its catchment and inherent income growth were key buyer draw cards coupled with the asset’s strategic location within a major Queensland economic hub and growth region.
“Mount Pleasant Centre was one of the strongest performing regionally located, sub regional shopping centres to be offered to the market in Australia in many years,” Rooney said.
“The key major tenants – Coles, Woolworths and Kmart – perform above industry averages, as does the centre’s food, service and convenience-related specialty component, which underpinned significant interest from buyers targeting sub regional assets with a non-discretionary retail focus.”
Mount Pleasant Shopping Centre
The sale follows an active first half for retail transactions, with CBRE’s Q2 MarketView highlighting that the total value of Australian retail transactions jumped 82% to $2 billion between Q1 and Q2, 2021, with the increase even more pronounced at 187% on a y-oy basis, given that Q2 2020 was heavily impacted by COVID restrictions.
The sub-regional sector was particularly active, with almost $1.3 billion in assets traded in Q2 this year – almost double what was transacted in the same period last year and 16% above Q2, 2019.
Notable recent transactions including the Perron Group’s Mirrabooka Square in Western Australia, sold to Fawkner for $195 million; CS Square in Victoria, sold by APPF to the DeLutis Family for $136.5 million; Makris Group’s Hallett Cove Shopping Centre in South Australia, sold to Antunes Group for $71 million; and MA Financial’s acquisition of Stockland Bundaberg in north Queensland for $140 million.
“With neighbourhood and freestanding retail assets selling at record pricing levels, investors are shifting their focus to high quality sub-regional shopping centres, oriented towards non-discretionary spending,” Rooney said.
“This market segment has performed well during the dislocation caused by the pandemic, demonstrating net operating income stability and transparent income growth.”
The 22,519m2 Mount Pleasant Centre is the dominant convenience-based retail complex within its trade area and the only sub-regional centre servicing a catchment of 112,520 residents. It offers a major tenant WALE of 8.4 years.
“The centre benefits from its strategic location within the Mackay region, which has a diverse and dynamic economy, underpinned by the significant coal deposits in the Bowen and Galilee Basins, supported by the region’s standing as one of the largest sugar-producing regions in Australia,” Rooney noted.
