Centro seeking buyer for Illawarra shopping centre

Shopping centre fund Centro Properties Group is seeking buyers for its Centro Albion Park shopping centre in Albion Park, a suburb of Wollongong in the Illawarra region of NSW.

The shopping centre has a book value of $15.2 million.

The property, on the corner of Terry and Russell streets, is being sold by Colliers agent Heath Crampton by expressions of interest closing on August 23.

The shopping centre is one of three in an $83 million syndicate Centro is looking to wind up in order fund redemption requests made by investors.

The other two, which have not yet been listed for sale, are Centro Townsville and Centro Newcomb, valued at $35.5 million and $26.5 million respectively.

The listing of the Albion Mall follows research from Burgess Rawson that has found that the average yield on supermarket transactions has contracted from 9.5% in 1991 to just 7% in 2011.

A 3,300-square-metre Woolworths supermarket in Umina in regional NSW, about 8o kilometres north of Sydney, was recently sold to a private investor for $18.25 million at a yield of 7%.

Crampton has told Property Observer he has received a “reasonable number of enquiries” to date and is expecting the mall, which has a gross leasing area of around 5,570 square metres, to generate a yield of between 8.5% and 9% on a fully leased basis.

The shopping centre has a book value of $15.2 million and brings in $1.48 million per annum when fully leased. More than half of this income comes from anchor tenant Woolworths. It serves a population of about 25,000.

Beside anchor tenants Woolworths and The Reject Shop, Albion Park centre has 12 speciality tenants including Millers Fashion Club, Horizon Credit Union, Michel’s Patisserie, Subway, Civic Video, Illawarra Mutual Building Society, one ATM and a freestanding Woolworths Petrol station. 

The 20-year Woolworths lease (including four renewal options of five years) commenced in November 1998 when the mall opened and is due to expire in November 2018. 

Woolworths pays gross rent of $860,000 per annum to lease 3,200 square metres of retail space.

Crampton says shopping centre investment activity is expected to pick-up significantly in the second half of the year, primarily due to the introduction of several new institutional managed wholesale funds with a focus to acquire sub regional and neighbourhood assets with a capital value of sub $100m.

“This sub $100m market has predominantly been limited to private investors in the last 24 months,” he says.