Centro Wodonga sale bodes well for regional shopping centre market

The sale of the Birallee Shopping Centre in Wodonga by Centro to Sydney-based investment firm Hadley Green for $11.7 million augers well for other regional shopping centres listed for sale.

The shopping centre, which has a gross lettable area of 5,686 square metres and is about a kilometre from the Wodonga town centre at 51-57 Elgin Boulevard, was sold by Colliers agent Lachlan MacGillivray.

The selling price was in line with the 30 June 2011 book value.

About 200 kilometres to the west of Wodonga, Michael Gross and Tim Darcy from Gross Waddell are selling the Deniliquin Plaza in the Riverina region of NSW by expressions of interest closing on August 17.

Offers of around $8 million are expected for the centre, which is bounded by Hardinge, Wood, Macauley streets and Hussey Lane, a commercial precinct west of Deniliquin.

It serves about 19,000 potential consumers in an agricultural region that produces rice, milk, potatoes and tomatoes.

It last sold for $6.6 million in August 2002.

Nearly three-quarters (72%) of the plaza’s $730,000 rental income comes from the Coles tenancy, which occupies 2,994 square metres – 71% of the 4,212-square-metre gross lettable area.

Coles holds a 20-year lease expiring in 2017 and pays percentage rent of 2% of gross sales for sales above $21.7 million. The lease has four renewal options of five years.

Other brand-name tenants include the Reject Shop (630 square metres), Bakers Delight (83 square metres) and Liquorland (204 square metres), plus a St George ATM. 

Leases range in length from three years to eight years. 

Hadley Green, which holds five more shopping centres in its portfolio, is forecasting an initial 9% investment yield for the Birallee Shopping Centre on the back of strong income and capital growth.

The shopping centre was jointly owned by the listed Centro Retail Trust and the CSI Fund, into which Centro-managed syndicates invested, the Australian Financial Review reported.

MacGillivray says syndicates and private purchases are “particurlarly hungry” for this type of asset due to its strong fundamentals, secure income and stable nature of tenancy profile.

The shopping centre sale follows the listing of Centro Albion Park shopping centre in Albion Park, a suburb of Wollongong in the Illawarra region of NSW by Colliers director of retail investment services NSW Heath Crampton.

The centre is part of an $83 million syndicate of three regional shopping centres Centro is looking to wind up in order to pay out investors.

Crampton, who is expecting a yield of between 8.5% and 9% for the Albion centre, expects shopping centre investment activity to pick-up significantly in the second half of the year.

This, he says is “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-$100 million”. 

“This sub-$100 million market has predominantly been limited to private investors in the last 24 months.” 

In April the Bundoora Square Shopping Centre (4,800 square metre of gross lettable area), about 15 kilometres from Melbourne, sold for $20.9 million at an equivalent market yield of about 7.4%.

In December 2010, the Findon Westside Shopping Centre (about 4,000 square metres of lettable area) in the western suburbs of Adelaide was sold for $13.2 million at an equivalent market yield of 7.74%.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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