Stockland buys Centro Townsville directly opposite current Stockland centre

Stockland has increased its presence in the Townsville retail market after purchasing Centro Townsville shopping centre for $36.5 million. 

The 13,650-square-metre sub-regional Centro centre stands on 4.2 hectares of land and includes Kmart, Coles, Commonwealth Bank and 25 specialty shops. 

The sale of the centre was negotiated by Peter Tyson and Jon Tyson of Savills in a joint campaign with Knight Frank Townsville's John Quinlan.

Tyson says the centre generated solid interest from the market.

"The asset was competitively sought by a number of institutional and private investors," he says.

“Over 100 buyer enquiries were fielded during the marketing campaign, with six competitive bids lodged, including two listed entities and four private investors.

“The primary attractions of the centre included the simplicity and compact nature of the asset, strong security of income underpinned by two blue-chip anchors, a favourable price point (under $50 million) and the obvious strengths of the Townsville economy."

Centro Townsville was valued at $35.5 million in April this year, up 4.5% from a December 2010 valuation of $34 million and last sold for $20.75 million in November 2001. 

CEO for commercial property John Schroder says Townsville is a key growth market and Centro Townsville is a strong strategic and complementary fit with Stockland’s existing centre, which is currently being redeveloped. 

“The purchase represents good value for Stockland with an initial yield of 8.3% and opportunities to create leasing, branding and operational synergies with our existing centre,” Schroder says. 

“When finished later this year the redeveloped Stockland Townsville will boast 46,000 square metres of lettable space including the region’s first Myer department store and many specialty shops new to Townsville. With this acquisition, we will be managing a precinct with 60,000 square metres of retail space, which will allow us to deliver a great community hub for customers,” he says. 

“Retail sales are projected to grow strongly in Townsville over the next decade.” 

The Centro stands directly opposite Stockland Townsville, which is currently being redeveloped into a 46,000-square-metre shopping centre at a cost of $175 million.

It will have an estimated completion value of $385 million and deliver an estimated internal rate of return of 11.5%. 

The diversified property group says the acquisition further strengthens its commitment “to this growing region in Queensland”.

In its interim results released last month, Stockland CEO Matthew Quinn said the property group would continue to sell its commercial and industrial assets and use the proceeds to reinvest in higher-yielding and less volatile retail assets.

Retail assets have generated returns of 10% for Stockland, while industrial assets have generated 8.3% and office assets 7% return.