MA Financial Group, formerly Moelis Australia, has agreed to acquire the Stockland Bundaberg sub-regional shopping centre in far north Queensland for $140 million amid heightened investor demand for quality retail assets.
CBRE’s Head of Retail Capital Markets – Pacific Simon Rooney negotiated the well contested, off-market transaction on behalf of Stockland.
The sale price represents a core capitalisation rate of 6.75 per cent and is the latest retail transaction for MA Financial who have purchased several retail assets in recent years including a 50 per cent stake in Westfield Marion in 2019.
Earlier this year the group also acquired specialist retail property services firm RetPro Group.
MA Financial intends to acquire the centre, to be renamed Sugarland Plaza, in a new managed fund currently being offered to wholesale investors.
Managing director and portfolio manager Richard Germain said MA Financial is delighted to have entered into an agreement to secure the asset – a highly attractive centre and institutional quality asset, with strong ties to the local Bundaberg community.”
“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 look forward to continuing to enhance the strength of the centre and delivering the community and our investors increased value. We certainly are seeing strong investor demand for this product, particularly given the strong prices achieved on some sub-regional assets that have transacted since we agreed this acquisition.”
CBRE’s Mr Rooney said 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, given the compelling comparative returns on offer.
Stockland Bundaberg was originally acquired by Stockland via two separate 50% acquisitions in 2014 and 2016.
The strong trading Bundaberg sub regional centre has a gross lettable area of 23,522 sqm and is anchored by strong performing anchors Woolworths and Big W and mini majors Best & Less and JB Hi-Fi, in addition to over 50 specialty retailers. SCN’s 2020 Little Guns report lists the centre as ranked 9 in Australia for specialty productivity.
“With neighbourhood and freestanding retail assets selling at record pricing levels, investors are shifting their focus to high quality sub-regional 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.”
This shift was evidenced, Mr Rooney said, by the high level of demand for CS Square in Melbourne, which was recently sold by APPF Retail to the DeLutis Family for $136.5m on a cap rate of 6.25 per cent.
“While private investors and syndicates are spearheading buyer interest in the sub-regional sector, the appetite from institutional investors is also increasing given the achievable returns,” Mr Rooney said.