Sydney funds manager Fortius has sold a neighbourhood shopping centre in Newcastle for $47 million, which it bought six years ago for $32 million.
The Junction Fair Shopping Centre was bought by relative newcomer Stirling Property Funds and is its third property acquisition.
Junction Fair is a non-discretionary-focused neighbourhood shopping centre anchored by a Coles supermarket and located in The Junction, 1.5 kilometres south of the Newcastle CBD, close to Merewether Beach.
The site has 7226 sq m of lettable area, 231 car spaces and sits on 11,250 sq m with four street frontages.
The centre’s non-discretionary and service-based tenants account for 77 per cent of its lettable area. Coles provides 50 per cent of the property’s income and its lease runs until 2027 with two 10-year options.
Fortius chief executive Sam Sproats said he was pleased with the investment outcome. He had negotiated the contract with Stirling before COVID-19 struck.
He said the speed of the pandemic and isolation restrictions had created uncertainty but neighbourhood shopping centres had proven their resilience – footfall and retail sales were returning to normal.
“Inner urban and neighbourhood centres continue to be a key target area and sector whereby Fortius’ skillset can be utilised,” Mr Sproats said.
“We are keenly focused on assets with multiple income streams, underpinning solid cashflow returns and some vacancy to secure commitments.”
Matthew Hyder, chief executive of Stirling Property Funds, said Junction Fair had demonstrated its strong non-discretionary nature during COVID-19, with April 2020 sales up 22 per cent year on year and 91 per cent of its tenants keeping their outlets open compared with discretionary weighted shopping centres where just 37 per cent of the tenants stayed open.
Stonebridge Property Group’s Philip Gartland negotiated the sale in conjunction with JLL’s Nick Willis.
“What COVID-19 has very much reinforced is the importance of non-discretionary retail and the important role that town centre assets have in serving the community and we are anticipating strong demand for this style of asset in the second half of 2020,” Mr Gartland said.
Mr Hyder said Stirling’s investment strategy was to acquire quality income-producing assets that demonstrated relative value to other property sectors, particularly in areas with government spending on infrastructure and where there was a growing population.
He said Stirling’s Junction Fair equity raising of $25 million had been oversubscribed and completed in just more than two weeks.
In 2018, Stirling bought its first property, an office/warehouse asset in Macquarie Park, for just more than $15 million and its second property last year at 203 Northumberland Street, Liverpool, for $47 million.