Although not a centro property, the sale achieved below a very solid cap rate, one that is better than the weighted avg cap rate of 7.5% across CER's Aust portfolio.
CER's top end properties (regional centres) such as Galleria and the Glen would have the lower cap rates (One only needs to look at the cap rates of WRT and CFX's properties in Australia to realise this), whilst the community centres would have higher cap rates.
Bundoora shopping centre is a community centre anchored by a supermarket, with several specality retailers, not too similar with the non-discretionary focus that underpins CER's portfolio. This type of centre in CER's portfolio would have a much higher cap rate presently than the one realised in this sale.
Anyway, thought this news was worthy of posting on this thread
Sale highlights strengthening in the Victorian retail investment market Melbourne, 19 April 2011-
The Bundoora Square Shopping Centre in Melbourne has been sold for $20.9 million in the first significant shopping centre transaction in Victoria for 2011.
Mark Wizel and Justin Dowers of CB Richard Ellis?s Victorian Retail Investments team negotiated the off market sale on behalf of Lascorp Development Group.
The deal reflects a tight yield of 7.4% and provides the latest evidence of a strengthening in the retail investment market.
?The sharp yield of 7.4% highlights the strength of demand for quality Victorian retail investment properties valued at under $25 million,? Mr Wizel said.
?Given the lack of retail investment opportunities coming to the market, investors are willing to accept a tighter yield with the anticipation of short to medium term growth in retail spending and ultimately retail rents.?
Mr Wizel added; ?No doubt many buyers were hopeful that more neighbourhood centres would be offered to the market for their consideration but in real terms this simply has not happened and if anything it has been larger centres that have been available but have often failed to transact due to vendor expectations and or difficulty in funding larger acquisitions.?
A number of parties were competing to secure Bundoora Square ? a neighbourhood shopping centre developed by Lascorp in 2002.
?The property represents as a great passive retail investment, underwritten by a strong trading Melbourne metropolitan Coles supermarket and a complementary mix of 14 specialty tenants,? Mr Wizel said.
Coles is the anchor tenant on a 15 year lease, with two 10 year options. Specialty tenants include the Commonwealth Bank, Flight Centre, Nando?s, Wishbone and Brumby?s Bakery.
?Following the GFC, purchasers are far more discerning when it comes to lease covenants,? Mr Wizel said. ?There is little doubt that purchasers are factoring in a number of different potential variables that may affect retail assets, however on the whole we feel that the confidence from investors into the sector is very positive.? Mr Wizel added; ?Astute purchasers want secure leases to major tenants such as Coles who have proven their resilience during volatile retail conditions.
In the case of Bundoora Square, the Coles supermarket has a history of strong trading figures. This, coupled with the property?s central location within the emerging northern corridor of Melbourne, provides greater certainty when it comes to tenant longevity.?
The 4,885 square metre centre is situated on a 8,803 square metre site 18 km north of the Melbourne CBD on the corner of Plenty and Settlement Roads. The property is centrally located in the retail and commercial hub of Bundoora, which is also home to La Trobe University?s Bundoora Campus.
Mr Dowers said the strong sale result was the latest indication of the strength in the Victorian shopping centre market. Whilst deals even for good quality properties were more difficult to complete at present due to funding, Mr Dowers said many buyers were seeing this as their opportunity to act and secure quality investments for the medium to long term.
?There appears to be a lot more confidence in the Victorian retail market compared to the other states primarily due to economic influences such as the city?s continued population and job growth,? Mr Dowers said.
CER Price at posting:
35.0¢ Sentiment: Buy Disclosure: Held
