Stockland offloads Bundaberg centre to MA Financial in $140m deal
Diversified property heavyweight Stockland has offloaded a subregional shopping centre in far north Queensland to a fund run by the listed MA Financial Group in a $140m deal.
The sale of Stockland Bundaberg was struck at a 3 per cent premium to the property’s June book value and showed a core capitalisation rate of 6.75 per cent.
MA Financial is a believer in retail assets and has swooped on a number of retail centres in recent years, including a half stake in Adelaide’s Westfield Marion in 2019. It also picked up specialist retail property services firm, RetPro Group earlier this year.
MA Financial managing director Richard Germain said the complex would be renamed Sugarland Plaza and was an institutional quality asset with strong ties to the area.
“Our conviction in the centre is underpinned by its robust fundamentals including high exposure to non-discretionary spend and service-based retailers, well above-average speciality productivity and very low occupancy costs,” he said.
“We certainly are seeing strong investor demand for this product, particularly given the strong prices achieved on some subregional assets that have transacted since we agreed this acquisition,” he said.
The deal was brokered by CBRE’s Simon Rooney and marked another major shopping centre sale by Stockland.
“The competitive outcome is a function of the limited supply of high-quality retail offerings available for sale, coupled with an increasing capital allocation to retail as an asset class,” Mr Rooney said.
Bundaberg was originally acquired by Stockland via two separate 50 half acquisitions in 2014 and 2016.
The sale follows the company’s disposals of Stockland The Pines in Melbourne and Stockland Caloundra, for a combined $249m last year.
The strong trading Bundaberg subregional centre spans a gross lettable area of 23,522sq m and is anchored by Woolworths and Big W and mini majors Best & Less and JB Hi-Fi, and more than 50 specialty retailers.
“With neighbourhood and freestanding retail assets selling at record pricing levels, investors are shifting their focus to high quality subregional shopping centres oriented towards non-discretionary spending,” Mr Rooney noted.
“This market segment has performed well during the dislocation caused by the pandemic, demonstrating net operating income stability and transparent income growth.
“While private investors and syndicates are spearheading buyer interest in the subregional sector, the appetite from institutional investors is also increasing given the achievable returns.”