Run continues on regional shops

The rush on regional shopping centre sales may have cooled in recent months, but the $14.55 million sale of Victorian regional centre Horsham Gateway shows there’s life left in the market yet.

The new shopping centre in Victoria’s Wimmera region, about halfway between Melbourne and Adelaide, was sold to a Chinese investor, with the price reflecting a yield of around 7.7%.

Underpinned by a 15-year lease to Target, the centre also has five specialty stores, as well as a gym operated by Snap Fitness.

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The centre, which was built on a 12,040sqm landholding, also has 2020sqm of surplus land that could allow for the centre’s expansion.

CBRE’s Mark Wizel, Justin Dowers and Kevin Tong sold the property on behalf of a local private developer.

Agents report the Chinese buyer saw off competition from local private groups, as well as Singaporean funds.

Horsham Gateway has more than 150 car parking spaces.

Dowers says Target leases remain sought after, despite the decline of discount department stores.

“There is no doubt that investors’ view of discount department stores has tapered in recent times off the back of inconsistent performance. However, it was imperative for this campaign to focus on the opportunity of having a large space leased to a major national tenant,” he says.

“The quality of the Target lease covenant remains just as strong as a Woolworths or Coles supermarket, however the rent per square metre is generally substantially less. Furthermore, having 3000sqm to 7000sqm of retail space currently leased to DDS tenants in prime located centres offers a strategic opportunity for future higher and better use.”

Wizel says interest in regional shopping centres remains solid.

“The sale of Horsham Gateway Centre is a very strong statement for the overall confidence that buyers have for retail assets both in regional locations and those that are leased to discount department stores” he says.

“Over the past 24 months, Chinese investors have spent more than $380 million acquiring shopping centres across Victoria – highlighting the ongoing strength in investment appetite for well-located assets backed by strong tenancy profiles.”