Woolworths has sold another modern shopping centre investment, this time in Sydney’s south west Spring Farm, banking $34.75 million.
Last August, the purchaser outlaid $44.25m on Corio’s Geelong Gate Homemaker Centre about 75 kilometres south west of Melbourne.
Colliers International’s James Wilson and Alex James-Elliott represented Woolworths at Spring Farm.
Spring Farm Shopping Centre
The transaction is the first for a New South Wales neighbouring shopping centre since (now relaxed) COVID-19 social distancing were put in place three months ago.
Spring Farm is 60 kilometres from the city, in a growth corridor.
On 2.1 hectares at the north west corner of Springs and Richardson roads, the investment contains 4813 sqm of lettable area – and is fully leased, three quarters (by area) to Woolworths.
There are nine specialty stores – some occupied by non-discretionary businesses like a medical centre and pharmacy, and a kiosk.
Eighty three per cent of the asset’s income is derived from national and chain retailers.
It also has 257 car parks.
Based on the annual rental return ($2.006m net), the yield is 5.77 per cent.
“Investor appetite continues to focus on non-discretionary retail investment opportunities, anchored by major supermarket operators and ASX-listed covenants,” Mr Wilson said.
The agency closed an expressions of interest campaign for Spring Farm Shopping Centre on April 2 (story continues below).
Supermarkets big buyers, sellers and developers
The biggest supermarkets competing in Australia – Aldi, Coles and Woolworths – are active real estate buyers and sellers.
The latter two go a step further – being major developers.
Both are quite tactical: Woolworths for example just last week co-investing with Time & Place for a low-rise office in Melbourne’s ritzy Glen Iris – now mooted for a mixed-use complex which will contain a supermarket space it can sell before, or after, completion. Colliers was also behind this deal
Earlier this week it sold Mittagong Shopping Centre, between Sydney and Canberra, banking $9.7m.
In the first quarter of the year, it was negotiating the sale of recently opened shopping centres: Keysborough Shopping Centre in Melbourne, which fetched $33.1m, while one in Wadalba, on the NSW Central Coast, traded for $26.15m – like Spring Farm, on a c5.7pc yield.
This month, Germany based Aldi was behind a major industrial deal: four distribution centres on Australia’s east coast which traded for $648m to Charter Hall.
More buyers in since COVID-19: agents
“Transaction results recorded during COVID-19 conditions haven’t deviated greatly in the small number of transactions executed since April, with ‘on market’ campaigns generating competitive bidding for a limited number of premium supermarkets and neighbourhood shopping centres,” Mr Wilson said.
“Colliers International have noted a growing number of private investors and unlisted funds targeting supermarket anchored, non-discretionary shopping centres,” the executive added.
“Growing purchaser interest contrasts with limited supply, leading continued market strength for supermarket anchored investment opportunities”.
That said, the agency’s Retail Investment Middle Markets division noted transaction volume for this asset type has decreased 23pc in the year to date, compared to the same time in 2019.
“The five transactions reported, totalling $129, in value, include campaigns that were run in late 2019 and thus were not impacted by the current economic environment,” the agency added.