Retail Property

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Sentinel Property Group has expanded into Western Australia with the acquisition of the Geraldton Homemaker Centre for $27.3 million.
Retail properties account for more than 50% of Sentinel’s assets under management, which is closing in on a total value of $1 billion.
The property is the first located off the eastern states of Australia for Sentinel, which has a total portfolio of 35 retail, industrial, office and land assets in Queensland, New South Wales and Victoria.
It is also the second asset for the newly-launched Sentinel Homemaker (Open Ended) Trust.
Warren Ebert, Sentinel managing director, said Geraldton is a strategic hub and major seaport for the mid-west of WA and has enjoyed 14 years of consecutive population growth. 
"A traditional agricultural region, the diverse economy of greater Geraldton now also encompasses mining, fishing and tourism and has an estimated output of $5.072 billion," he said.
The purchase of Geraldton Homemaker Centre was negotiated by Philip Gartland of Stonebridge Property Group and Simon Parsons of Parsons Hill Stenhouse.
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jchancellor-FAypfDUnLy

Geraldton Homemaker Centre sold for $27.3 million

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GUEST OBSERVER
The Retail Leases Amendment (Review) Bill 2016 was introduced into NSW Parliament on 8 November 2016 and when enacted, this legislation may make substantial amendments to many of the provisions of the current legislation, the Retail Leases Act 1994 (NSW) (RLA), governing most retail shop leases in New South Wales.
Some of the changes proposed by the Bill have been outlined below but first we must mention that some of the Bill is intended to have retrospective application:
Retrospective operation of amendments
Clause 38 of the Bill gives retrospective operation to the provisions of the Bill and extends the operation of the Bill to any leases and disclosure statements given, before the commencement of the amendments except as otherwise provided by the Bill.
Major Reform - Repealing the minimum five year term
The Bill removes the current minimum five year term for retail shop leases; the original intent of the introduction of a minimum five year term was to afford greater protection to the goodwill built up by a tenant and to protect the investment a tenant has made in fit out.
The result of getting rid of the five year minimum lease may be that more leases are being structured with shorter terms. Before the RLA, many retail leases were only 3 years but the new norm is now 5 years. The proposal gives greater flexibility to tenants to ask for longer or shorter terms however the potential for shorter terms may result in a greater turnover of tenancies. This may in turn have a detrimental impact on other tenants who are left behind when a key tenant does not elect for a longer term.
However the removal of this provision may save time and costs for both parties. The minimum five year term was not a benefit to tenants who sought a lease for less than five years as they would need to pay legal fees to obtain a s16(3) certificate from a lawyer to do so.
Exclusion of non-retail uses from RLA’s operation
The Bill excludes premises used wholly for certain non-retail purposes from the operation of the RLA. The excluded purposes are outlined in a new Schedule 1A and include the following (among other things):
<ul>
<li>ATMs;</li>
<li>Car parking;</li>
<li>Vending machines;</li>
<li>Public telephones;</li>
<li>Children’s ride machines;</li>
<li>Signage displays;</li>
<li>Internet booths;</li>
<li>Private post boxes;</li>
<li>Certain storage uses.</li>
</ul>
The Bill also removes an exclusion from the RLA for any premises in an office tower that forms part of a retail shopping centre. This means that the removal of the provision is not to include office towers; the reasoning is because the original exception was unnecessary as an office tower does not form part of a retail shopping centre simply because it is part of the same building. However the removal of this exception retrospectively may create practical issues where premises that have initially been deemed to be excluded under this provision now may no longer be excluded based on their factual circumstance. By functioning retrospectively the amendments would greatly burden those parties.
Additionally, the Bill asserts that the provisions will not apply to a retail shop that is a stall in a market unless the market is a permanent retail market.
Better Tenant Protection
Other changes proposed by the Bill include:
Disclosure Statements
<ul>
<li>
Landlords will be liable to pay compensation to tenants who terminate a lease in the first six months because they were not provided with a disclosure statement, or the disclosure statement was incomplete or false or misleading.
<ul>
<li>The compensation payable is the costs reasonably incurred by the tenant in entering into the lease, including expenditure in connection with the fit-out of the premises.</li>
</ul>
</li>
<li>A tenant is not required to pay outgoings unless that liability was disclosed in the landlord’s disclosure statement.</li>
</ul>
Disclosure of tenant’s financial obligation
<ul>
<li>If the landlord’s disclosure statement provides an estimate for an outgoing and the actual amount of the outgoing is more than the estimate, then if there was no reasonable basis for the estimate when the disclosure statement was provided, the tenant’s liability will be limited to the estimated amount, and all subsequent increases in outgoing will be limited by reference to the estimated amount.</li>
</ul>
Bank guarantees
<ul>
<li>
The landlord is required to return a bank guarantee to the tenant within 2 months after the tenant completes performance of obligations under the lease that are secured by the bank guarantee.
<ul>
<li>This allows the tenant to have certainty about the return of the bank guarantee, but also affords the landlord sufficient time to confirm compliance by a tenant with post-termination obligations.</li>
</ul>
</li>
</ul>
Online Transactions
<ul>
<li>Turnover rent must exclude revenue accrued from online transactions, except where goods or services are delivered or provided from the retail shop or where the transaction takes place while the customer is at the retail shop.</li>
<li>The tenant is not required to provide the lessor with information about online transactions except for transactions where goods or services are delivered or provided from the retail shop or where the transaction takes place while the customer is at the retail shop.</li>
</ul>
Mortgagee consent expenses
<ul>
<li>The tenant is no longer required to pay lease preparation expenses (including expenses incurred in obtaining mortgage consent to a lease) in connection with the granting, renewal or extension of a lease.</li>
</ul>
Employment Restrictions
<ul>
<li>The employment restrictions the landlord has over the lease is extended to impose on a tenant requirements for police and security checks for tenant’s employees or contractors carrying out works in the premises. However, this is only if the Registrar of Retail Tenancy Disputes has approved of their inclusion in the particular case.</li>
</ul>
Amendments that may benefit Landlords
Disclosure statement
<ul>
<li>The revised definition of outgoings extends the definition to fees charged by a landlord for services provided by the landlord ‘in connection with the management, operation, maintenance or repair of the retail shop building or land’.</li>
<li>A landlord’s disclosure statement may be amended if both parties agree in writing.</li>
</ul>
Other general amendments
Demolition
<ul>
<li>The protections afforded to a tenant when the lease is terminated on the grounds of a proposal to demolish the building are extended to termination on the grounds of proposed demolition of any part of the building. Proposed changes also clarify that termination on the proposed demolition is only permissible if the proposed demolition cannot be carried out practicably without vacant possession of the shop.</li>
</ul>
Assignment of lease
<ul>
<li>There is clarification on the procedure for obtaining the landlord’s consent to the assignment of a retail shop lease, however the provision still includes a deemed consent by the landlord if the landlord has not responded within 28 days from when the request for consent was made by the tenant or from when the tenant has complied with the requirements under the RLA.</li>
<li>Where a retail shop lease has been awarded by public tender, the landlord can refuse consent to assignment of the lease if the proposed assignee fails to meet any criteria of the tender.</li>
</ul>
Jurisdiction of the Tribunal
<ul>
<li>There is an expansion of existing power of the jurisdiction of the Civil and Administrative Tribunal and an increase to the monetary limit for claims arising under the RLA from $400,000 to $750,000.</li>
</ul>
Lease execution and registration 
<ul>
<li>The time period for which the landlord is required to provide the tenant with a signed copy of the lease has increased from 1 month to 3 months.</li>
<li>Leases for a term of more than 3 years will be required to be registered, and must be lodged for registration within 3 months after the executed lease is returned to the landlord.</li>
</ul>
Conclusion
Currently there is no guarantee that this Bill will be passed, and the Bill will likely undergo further discussion and amendments before it is enacted. Parties involved in retail leases as tenants or landlords however should be aware of the potential changes to the Bill as they will be expected to comply with the new requirements when the Bill is passed as the legislation will not only apply to future retail leases but also leases entered into before the enactment of the legislation.
Gary Newton is partner TressCox Lawyers and Henry Yuan is paralegal. Both can be contacted <a href="https://www.tresscox.com.au/page/our-expertise/property/" target="_blank">here</a>.
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Proposed amendments to the NSW Retail Leases Act may affect retail landlords, tenants 

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Bondi Beach-based former horse breeder Dean Fleming has withdrawn his Port Douglas commercial premises from sale.
It was offered for sale with a lease to the Port Douglas Happy Herb Shop, a retailer selling 'healthy, happy, natural and chemical free products'.
The tenant has the lease until 2020.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/2/port%20douglas%201.jpg" alt=""> 
Raine &amp; Horne Port Douglas Mossman agent David Cotton was listing the property.
Fleming paid $605,000 for the 92 square metre Macrossan Street shop in 2009.
Last year Fleming downsized to a <a href="https://www.urban.com.au/news/70525-former-horse-breeder-dean-fleming-purchases-north-bondi-apartment" target="_blank">$3,025,000 North Bondi apartment. </a>
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Horse breeder Dean Fleming withdraws Port Douglas retail store

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A freestanding retail investment at 13-17 Main Street in Beenleigh has sold at public auction for $1,787,500.
The 1,391 square metre site was purchased by a Gold Coast-based private investor at the auction following a campaign by JLL’s Andrew Havig on behalf of a local family who had owned the asset since the 1980s.
There were over 40 enquires with multiple offers prior to auction.
The prominent freestanding retail strip of seven shops with 472 square metre of net lettable area, is underpinned by a long-term anchor in Suncorp Bank, who have just signed a new five-year lease through to July 2022.
The property also holds Jobs Australia, Advanced Property Management, Sharp Cuts for Men and Far East on Main as tenants and provides 25 on-grade car parking bays onsite. 
Situated in the Logan City Council Local Government Area (LGA), 13-17 Main Street is located at the midpoint of surrounding residential, commercial and industrial precincts in the rapidly growing suburb of Beenleigh.
It had extensive frontage and exposure to Main Street.
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j.ballantyne1990-6AQqhLzZaK

Freestanding retail hub in Beenleigh sells for $1,787,500 at auction

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Snap Fitness is opening up a new gym in Sherwood after signing a 5 year lease with a 5 year option at $190,000 per annum.
Snap Fitness was looking to expand their services into the area and found the high exposure location at 689 Sherwood Road ideal.
The 490qm retail tenancy was previously occupied by Joval Group who had to find another location before vacating the tenancy.
Conor Whiting, executive of office leasing at Colliers International who negotiated the leases for both businesses said leasing documents had to be signed simultaneously for the deals to go ahead.
“Joval Group had a year and a half left on their lease and were looking at other options as they weren’t utilising 300sqm of the space at the Sherwood Road tenancy. We assisted them in finding a new location so they could be released from the current tenancy."
“Joval Group's requirement was to downsize and still remain within the fringe location. As a result we found a suitable new 138sqm new tenancy with adequate parking at 47 Park Road in Milton for which they signed a 3 year lease with a 3 year option at $63,900 per annum”, says Mr. Whiting.
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Retail leasing deals in the Brisbane fringe

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The top five recent Burgess Rawson commercial auction sales include three Dan Murphy retail outlets, a Bunnings store and a Hungry Jacks restaurant.
The sale spanned the east coast of Australia from Victoria, the Australian Capital Territory and Queensland.
1 Dan Murphy's 328-332 Victoria Road, Gladesville, NSW, sold for $11,510,00, a yield 4.56%
2 Dan Murphy's 169 Crawford Street Queanbeyan, ACT, sold for $11.3 million on a yield of 4.7%. 
3 Bunnings, 74 Nyah Road, Swan Hill, Victoria, sold for $10,950,00, a yield of 5.11%
4 Dan Murphy's 1177-1183 Pascoe Vale Road, Broadmeadows, Victoria, price undisclosed
5 Hungry Jacks 100 Edith Street Innisfail, Queensland, sold for $2,825,000 - yield of 5.71%
 
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Top five Burgess Rawson commercial auction sales

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South Sydney is growing a significant precinct for ‘foodies’, with numerous high-end cafes, restaurants and food outlets already in place and with more to come.
Divercity, a significant Waterloo retail offering in the middle of South Sydney’s growing food-retail precinct, at 830-850 Bourke Street, has just been sold for $11.5 million.
Goldman Sachs and Fortress sold Divercity to an experienced private investor.
The property features 18 retail shops varying in size from 50 square metres to 150 square metres, surrounding a plaza, with the potential for further subdivision or amalgamation.
The site includes five high-profile main road showrooms, and also four two-level commercial suites with security parking that will overlook a park being developed on an adjacent site.
Knight Frank’s Director of Sales and Leasing for South Sydney, Daniel O’Brien, along with Knight Frank’s Brett Burridge, Senior Director of Commercial Sales, managed the sale on behalf of Fortress / Goldman Sachs to an investor who has other properties in the area. 
The property at 830-850 Bourke Street sold in a week after it was shown to three local investors.
Nearby food outlets include:
* East Village – 4 Defries Ave, Zetland – retailers include Coles and Bowan Island Bakery
* Kitchen by Mike – 85 Dunning Avenue, Rosebery – restaurant
* Pizza Mario – 36 Morley Avenue, Rosebery – restaurant
* Simon Johnson – 24A Ralph Street, Alexandria – providores’ market
* Fratelli Fresh – 52 Mitchell Road, Alexandria – fresh produce and restaurant
* Bread &amp; Circus – 21 Fountain Street, Alexandria – high-end wholefoods café
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South Sydney food retail sale at $11.5 million

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Marketed as Australia's most affordable Woolworths, Burgess Rawson have secure the sale of the George Town, Tasmania premises for $4.95 million at recent auction.
The 8 Bathurst Street, George Town tenants come with an established lease with 20 + 10 year lease through to 2042. 
The rent is $336,682 pa.
The 1978 square metre Woolworths at <a href="https://www.burgessrawson.com.au/3P1087#.Va8OqSqqqko" target="_blank">8 Bathurst Street, George Town</a> has been described as a "consistent and progressively performing investment" with a captive trade catchment. 
The single tenant offering has minimum management investment with income tax saving depreciation. 
George Town is described as a residential and service centre for major industry including Bell Bay Aluminium generating a 1,500 workforce. 
George Town is a large town in north-east Tasmania, on the eastern bank of the mouth of the Tamar River. 
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George Town Woolworths sells at $4.95 million

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Woolworths-backed retail properties sold well at last week's Burgess Rawson portfolio auction in Sydney.
The two, large-format Dan Murphy's liquor stores in NSW smashed price expectations on sub-5% yields.
A near-new Dan Murphy's on Victoria Road in Gladesville fetched $11.51 millon on a 4.6% yield.
A new Dan Murphy's on Crawford Street in Queanbeyan, NSW sold for $11.3 million on a yield of 4.7%.
Both properties have fresh 15-year leases with Woolworths plus renewal options to 2060.
Burgess Rawson director Graeme Watson, who forecast the Dan Murphy's liquor stores to sell for as much as $10 million with yields ranging from 5.5% to 6.25%, said he had over 350 enquiries for the two Dan Murphy's.
There were seven bidders on each of the properties.
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Dan Murphy stores sell at sub-5% yields at Burgess Rawson auction

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Expanding Australian retailer Cotton On Group is to open 150 stores in the lead up to Christmas.
It is part of its target to add 570 new stores over the next three years internationally.
"Between now and 25 December, we’ll be opening 153 stores globally, which equates to more than one new store per day," Cotton On Group CEO Peter Johnson told Ragtrader.
Currently, the group has 20,000 team members across 17 countries.
In Australia, the Group will be focusing on New South Wales. 
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