MRL Investments has paid $15 million for its first retail investment – the St Lucia Marketplace, in Brisbane’s inner south west.
The deal with Marquette Properties was struck on a 5.5 per cent yield.
Both the vendor and purchaser are headquartered in the Brisbane CBD.
According to the selling agents – the sale price of St Lucia Maretkplace marks the tightest ever return for an IGA-anchored Queensland shopping centre.
Eleven offers – all within 15 per cent of the sale price – received: CBRE
The 3033 square metre site at 228 and 242 Hawken Drive, on the corner of Boomerang Road is configured with two buildings – 56 per cent tenanted to the independent supermarket.
Eleven speciality retailers also rent within the 1960 sqm complex, contributing to total annual rent of $830,541.
The weighted average lease expiry is just over six years, while 86 per cent of the leases are on agreements with annual rent rises of between three and four per cent.
The sale price paid by MRL Investments values every sqm of lettable area at $7653.
CBRE’s Joe Tynan and Michael Hedger said 11 offers – from a mix of local, interstate and offshore investors – came in for St Lucia Marketplace.
Interestingly, the agents noted, all offers were within 15 per cent of the final sale price.
Low interest rate environment, above average interest
Australia’s current record low interest rate environment is a major demand driver, the brokers said.
“There is increasing competition from new capital in the market,” Mr Tynan added.
“More than 40 per cent of enquiries came from new investors, and the acquisition represented MRL Investment’s first foray into retail.
“The level of enquiry and bidding was above average for this category of shopping centre, primarily due to its prime location and solid investment fundamentals,” the broker said.
“We are continuing to see significant yield compression for neighbourhood shopping centres that offer security through a tenancy profile of non-discretionary retailers.
“This was evidenced in our recent transactions of Woolworths Ormeau and Woolworths Logan Village, which both achieved yields under six per cent.”
St Lucia is four kilometres from the CBD.
The retail asset which just sold is about 500 metres from the 114-hectare University of Queensland campus which is undergoing a major refurbishment.
More than 61,600 students and teachers attend the school daily, the agents added.
Some 13,500 people live in St Lucia Marketplace’s catchment.
Great cash flow and significant capital gain for investors: Marquette Properties
Following the St Lucia Marketplace disposal, Marquette controls a portfolio worth about $400 million.
Established in 2009, the wholesale property investment fund is supported by a mix of private family capital and local and foreign partners.
“Marquette is all about buying assets, making them better, and on-selling demonstrably different properties to what we bought,” the company’s managing director, Toby Lewis, said.
“Our investors have enjoyed great cash flow and now a significant capital gain and we wish the new owners every success during their ownership,” the executive added, of the St Lucia Marketplace sale.
“We were pleased with sale process and feel that the asset’s key benefits were well marketed by CBRE and hence led to huge enquiry levels and really strong and tight bidding,” Mr Lewis said.
“The IGA store is best-in-class which underpins the asset and helped with a sub-6% yield for an IGA anchored centre.”