Charter Hall Retail has entered into an agreement to buy south Sydney’s sub-regional shopping centre Rockdale Plaza for $142 million on a capitalisation rate of 6.25 per cent.
Charter Hall Retail will undertake a fully underwritten $150 million institutional placement at an issue price of $4.51 per unit to fund the acquisition and will also complete a non-underwritten unit purchase plan to eligible unit-holders in Australia and New Zealand which is expected to raise a further $10 million.
Rockdale Plaza, with a total GLA of approximately 21,331sqm located just southwest of Sydney Airport, has an occupancy rate of 99.8 per cent and is anchored by Woolworths and Aldi supermarkets, a Big W DDS, seven mini-majors and 46 specialties and convenient and parking for 907 vehicles, driving 4.5 million annual customer visitation (+3.0 per cent year on year).
Simon Rooney, JLL’s head of retail investments for Australasia who brokered the deal, said while the focus for some institutions has been on disposals, this transaction demonstrates that A-REITs will continue to target and selectively acquire quality retail assets as they reweigh their portfolios towards higher-growth metropolitan locations.
“Sub-regional shopping centres in the Sydney metropolitan area are tightly held with typically only one opportunity being made available per year,” Rooney said. “Metropolitan-located retail assets are highly sought after given their exposure to strong population growth and rising urban density, particularly in Sydney and Melbourne.”
Rooney said investors are seeing value in the retail sector given the recent shift in asset pricing and attractive yields.
“While the focus for some institutions has been on other asset classes, a number of groups are making tactical retail acquisitions and we expect more investors to consider the relative value of retail throughout the remainder of 2019,” he said.
“Transaction activity reached the third highest level on record in 2018, with 123 deals totalling $8.1 billion.”
Gregg Chubb, Charter Hall’s retail chief executive, said Rockdale Plaza was a high performing centre.
“Underpinned by supermarkets and non-discretionary food and service-based uses, the acquisition aligns with the REIT’s investment strategy and enhances portfolio metrics to ensure we continue to deliver long-term sustainable growth in earnings for investors.”
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