The acquisition has been undertaken in line with Ray White Invest’s strategy to deliver superior risk adjusted returns from active management of high quality direct property investments.
Located in a growing residential area on 7.5 hectares of land, the property comprises a single level neighbourhood shopping centre anchored by a Woolworths supermarket, together with Woolworths petrol, 30 shops and a 6-plex cinema.
The joint venture will collaborate with Woolworths to rework elements of the existing centre and develop the surplus 2.5 hectares of development land to substantially improve and create a fully integrated retail offer. Woolworths owned liquor outlet chain Dan Murphy’s has committed to the new development, with a 1,400m2 tenancy to be constructed as part of a 10,000m2 expansion.
On completion of the first stage of the development works, the property will have approximately 20,000m2 of retail space with an end value of circa $100m. Woolworths tenancies will comprise approximately 30 per cent of net income on completion.
The acquisition equates to a net yield of approximately 6.5 per cent pa on the shopping centre component and $9m for the surplus land.
Currambine is 30kms north of the Perth CBD. The demographic profile of the area is particularly supportive of strong retailing – population growth is double the Perth average, with a young average age and relatively high household incomes when compared to the Perth metropolitan area. The property is expected to experience continuing strong trading growth.
Ray White Invest partners with selected privately owned property developers to undertake projects (typically up to $150m) in the commercial, industrial, retail, leisure, retirement, infrastructure and residential property sectors. The Group has relationships with more than 60 developers and over the past seven years has undertaken more than 200 investments equating to over $2.2 bn in property value on completion.
Mr Dan White, CEO of Ray White Invest, said the Currambine acquisition represents a strong outcome for Ray White Invest and its investor partners.
“Our wholesale fundraising program undertaken over recent weeks was closed over-subscribed. Our investor partners recognise the strong fundamentals of the property, the unusual combination of covenant strength and development potential.”
“What has been gratifying about this purchase has been the preparedness of professional investors to coolly evaluate this retail opportunity on its merits and not be sideswiped by the recent hysteria created by Centro’s problems. We always maintained a deep-belief in the quality of this proposal right from the time, last November, when we conditionally acquired this property,” said Mr White.
He said the deal also represented a continuation of the Group’s long term relationship with Blair Group. The reconfiguration and development plans prepared by Blair Group were critical factors in Woolworths agreeing to sell the property to the joint venture. Woolworths has strongly endorsed the plans and development team assembled by the Joint Venture.
Mr Jason Blair, Managing Director of Blair Group, said: “We are looking forward to the successful delivery of the project and continuing to expand our relationship with Woolworths. We have great opportunity to add significant value for all the stakeholders. We will introduce new retail offers and enhance existing offers underpinned by existing retail demand in the trade area. We have developed a strong relationship with Woolworths by approaching development from a long-term retailing perspective. We look forward to working with our partners to add significant value for our investors, tenants and the local Currambine community.”