Neighbourhood supermarkets take the early running
Supermarket-anchored neighbourhood centres and big-format retail led the charge among retail assets during the coronavirus crisis with sales turnover holding up as home bound customers poured in.
Their success has up-ended the traditional retail hierarchy with many trading at levels that surpass bigger regional and super-regional malls, which remain under pressure.
Big-format retail specialist Aventus Group, which is backed by billionaire Brett Blundy, last week quietly announced that its September distribution was about 3 per cent higher than at June, prompting analysts to suggest it would beat market expectations.
Listed neighbourhood shopping centre owners have also fared well during the crisis, with the direct market now running ahead of their portfolio values.
In one of the tightest deals, Woolworths Greenvale Lakes in the Melbourne suburb of Roxburgh Park last week traded on a sub 4 per cent yield to Melbourne-based Taroni Investments in a $27.7m deal.
The new supermarket-anchored centre sold on a yield of 3.95 per cent and more deals are expected at close to the level at which the 3403sq m neighbourhood shopping centre traded.
Stonebridge Property Group’s Justin Dowers, Kevin Tong and Philip Gartland brokered the sale for Woolworths and said it showed positive sentiment around retail investments anchored by strong covenants, especially supermarkets.
The same agency also sold a “traditional” neighbourhood shopping centre in Melbourne’s western suburbs on a yield of below 5 per cent. In that instance, Melton Station Square Shopping Centre sold on a 4.83 per cent fully leased yield for $43m.
Mr Dowers and Mr Tong sold the property off-market for the Loucom Group to a syndicate of local Asian investors. The 1.39ha site is anchored by a Coles and Liquorland and 12 specialty retail shops.
“The investor sentiment for neighbourhood shopping centres remains very strong and for good reason. The centres are performing better than they ever have and represent a very low risk investment option,” Mr Dowers said. More sales are also being struck in regional Victoria, with Eastwood Village in Bairnsdale and West Place Shopping Centre in Churchill selling for a combined value of about $30m.
Eastwood was acquired by Hadley Green Investment Group, and West Place was acquired by Sydney developer Revelop in deals brokered by JLL‘s Tom Noonan and Stuart Taylor.
The deals point to the essential service tenancy mix which has attracted investors, where income is underpinned by supermarket, medical and pharmacies, Mr Noonan said.