An Eye To 2021 Australian Shopping Centre Market Update - Efront
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An Eye To 2021 Australian Shopping Centre Market Update
Market Wrap Up Where will 2021 take us..?
2020 was the year of new phrases for the retail landscape- » “Never let a good crisis go to waste” was the famous This has renewed discussions by retailers for exclusive
quote of Winston Churchill and some retailers and turnover rent lease arrangements, whilst landlords have
social distancing, sanitising, essential services, face masks, retail landlords used 2020 to reset business models, resisted and have begun to framework the provision of
strategies and focus on growth areas going into 2021. It e-commerce sales in leases. This stand-off will continue
customer density per square metre, contactless parcel is these forward planning participants that will be best to play out over 2021.
placed to leap frog the pack in 2021. 2020 provided an
» Challenges will continue for centres that are capital
pick-up and unfortunately many of these terms will stick with opportunity for retail landlords to consider how their
intensive or require large defensive capital to protect the
assets are placed amongst their competitors, identifying
us into 2021 and some for much longer. their strengths and where the opportunities lie to take
asset investment.
advantage of the ‘new normal’. » Administrations remain low relative to the historical
average with landlords in some instances unable to
» As retailers rationalise their physical footprint and the
terminate leases in accordance with the Code of Conduct.
It was a remarkable year for Australia and indeed the world. ‘flight to quality’ assets steadily intensifies, some centres
Retailers will face renewed pressure with the cessation
will require significant capital to remain competitive.
of rent relief and consumer stimulus with the ending
Some industries were impacted more by COVID-19 than Centres in regional locations with high levels of
of Jobkeeper payments, bank mortgage relief, and
competition, and major tenant backfill risk will be
others. Government imposed business hibernation and hardest impacted, whilst centres in major metropolitan
superannuation access, which have provided consumer
stimulus. The below chart reflects the declining number
locations, with high population density, and market
social distancing measures ensured it was an extremely leading experiential initiatives will be well positioned to
of insolvencies in the Retail Trade Sector despite very
challenging trading conditions.
attract leading edge retailers from a smaller than ever
challenging year for retailers and retail landlords. tenant pool. » A large proportion of retailers remain on lease holdover or
on short term leases, posing particular risk to centres with
» The onset of the COVID-19 pandemic accelerated online
a high representation of discretionary retailers. We expect
penetration, with some retailers investing in digital
Following what seemed like an apocalyptic set of and omnichannel networks. Retailers that benefited
vacancy to increase in the short to medium term.
from cost savings associated with store closures and » The strong investor demand in late 2020 for neighbourhood
circumstances for the industry, by the end of 2020 certain strong online sales were able to realise record profits. and LFR assets sub-$100m has already continued into
2021, which is keeping downward pressure on yields.
sectors were proving to be quite resilient and some retailers
Quarterly Insolvency Reports for Retail Trade Sector
were performing quite well.
200
180
However, the retail property investment market is currently 160
Number of reports
segmented and there are still many challenges ahead for 140
120
some asset classes, including CBD assets and discretionary 100
focused retail centres including regional and sub-regional 80
60
centres. The standout performers included neighbourhood 40
shopping centres, freestanding supermarkets and hardware 20
0
stores.
Source: m3property and ASIC
Page 2 | An Eye to 2021 Page 3 | An Eye to 2021
Investment Market
Investor Supply and Demand Bond Rate Movement
» The market for sub $100 million assets will remain strong, » Raising debt and equity will continue to be challenging Australia 10-Year Bond Yield Overview
buoyed by the low cost of debt fuelling private investors for acquiring assets over $250 million.
and institutional owners with a mandate to acquire ‘daily 3.00%
» We expect investor fund redemptions to result in assets
needs’ focussed assets.
being put to the market throughout 2021 and with less
» Investors will focus on Core and Core Plus assets. Assets volatility in the global markets, vendors will be more 2.50%
with income risk, particularly around major tenants and encouraged to take stock to the market with purchaser
discretionary retailers, will be less attractive, however demand more stable.
opportunities present for investors willing to accept the 2.00%
» Border closures remain a barrier for global capital, and
risk of strategically repositioning and remixing assets.
in some instances, interstate opportunities, impacting
» Potential investors and debt providers remain focussed liquidity, particularly for larger assets.
on stabilised income, and for income stabilised assets, 1.50%
shopping centre total returns are going to increasingly
look appealing against other asset classes and
alternative investment opportunities, as indicated in the 1.00%
below chart.
0.50%
Prime Equivalent Market Yields (December 2020)
7.00% 6.50% 0.00%
6.28% 6.13% Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21
6.00% 5.46% 5.31% Source: m3property and investing.com
5.12%
5.00% 4.75%
Equivalent Yield (%)
» Will the recent uptick in bond yields put a dampener
4.00% on property values? Since mid-October when the 10
year Australian bond rate hit its nadir at circa 0.84% it has
3.00% increased circa 87 basis points to around 1.71%. With “ Short term bond
subdued turnover growth projections and rental growth
2.00% forecasts already putting downward pressure on centre
yield changes don’t
0.98%
1.00%
income, and at a time when capital into sub-regional and
regional shopping centre investment is already constrained,
immediately impact asset
0.00%
a sustained increase in bond yields would place further pricing, but a sustained
pressure on asset pricing.
Industrial
Neighbourhood
Large Format
Regional
Sub Regional
Office
10 yr Bond Rate
CBD Retail
increase may subdue
Retal
asset values ”
Source: m3property
| Page 4 Page 5 | An Eye to 2021Income and Retail Spend
Income Analysis Retail Spend
500
» Income risk has been a key focus for investors in » Retailers are still facing challenges securing sufficient
Weekly index of consumption per person
450
recent years and none more so than the current time. inventory which is seen as a double blow to retailers after
(100 = normal weekly average)
400
the business hibernation measures. With consumers
» The Government introduced Code of Conduct was 350
returning to centres, limitations on stock are preventing
instrumental in stemming retail business failures, 300
some retailers from capturing this spend and this has
but it was considered to strongly favour tenants over 250
impacted tenant turnover.
landlords and impacted landlord cash flows. 200
» For other retailers that experienced a turnover spike
» The cessation of the Code subdued retail spending 150
during lockdown or leading into Christmas, it will be
growth, and the ending of Job Keeper payments will 100
important to see if these levels of spending can be
put increased pressure on retailers and in turn income 50
maintained into 2021. Prudent retailers are preparing
profiles of centres. 0
for more subdued growth in 2021.
9-Feb-20
23-Aug-20
20-Sep-20
19-Apr-20
17-May-20
31-May-20
9-Aug-20
6-Sep-20
18-Oct-20
1-Nov-20
14-Jun-20
28-Jun-20
12-Jul-20
26-Jul-20
4-Oct-20
22-Mar-20
5-Apr-20
3-May-20
23-Feb-20
15-Nov-20
29-Nov-20
13-Dec-20
8-Mar-20
» Neighbourhood centres, supermarkets, and Bunnings
» Bricks and Mortar retailing lost market share to online
warehouses have attracted keen investor attention due
retailing during 2020. Innovative omni-channel retailers
to the high weighting of income secured by desirable Cafes Food Delivery Health Services Pharmacies Supermarkets
that invested in their online experiences protected
non discretionary retailers.
revenue by transitioning sales from physical to online Source: m3property and alpha beta
» Secondary and larger regional centres with a weighting platforms. How much of the online spend reverts to » Turnover growth for the key
towards discretionary retailers have required significant bricks and mortar stores will depend on how long the non-discretionary tenants of supermarkets,
140
defensive capital to preserve asset value and remain pandemic will continue to impact bricks and mortar pharmacies and food delivery has
Weekly index of consumption per person
120
competitive. stores and how successful retailers and, more pressingly performed at the same or stronger levels
(100 = normal weekly average)
100
landlords are at enticing customers back into centres. than pre-COVID as indicated above.
» Centres with Discount Department Store income risk 80 Health services and cafes were impacted
also require significant capital sums to be reserved for » Landlords of Regional centres are reporting significant but have since rebounded to pre-COVID
60
repurposing large tenancies that may become vacant. leasing spreads, particularly for discretionary categories levels nationally.
40
such as fashion. » As expected, non-discretionary/
20
essential spending was less impacted
0 19.01.20
than discretionary spending during the
20.02.20
16.02.20
01.03.20
15.03.20
29.03.20
12.04.20
26.04.20
10.05.20
24.05.20
07.06.20
21.06.20
05.07.20
19.07.20
02.08.20
16.08.20
30.08.20
13.09.20
27.09.20
11.10.20
25.10.20
08.11.20
22.11.20
06.12.20
height of the pandemic. Interestingly,
Discretionary Total spending Essential both categories bounced back strongly
once lockdown restrictions began to ease
particularly in late 2020, with discretionary
Source: m3property and alpha beta
spending growth outstripping
non-discretionary spending growth.
| Page 6 Page 7 | An Eye to 2021Income and Retail Spend
Repurposing Vacancies Retailer Performance
The potential for major tenants to vacate tenancies has become far more common in recent years. Shopping centre Tenant failures have been well publicised over recent years and the rate of failures, particularly in the fashion category is an obvious
landlords are formulating defensive strategies to repurpose at-risk large tenancies should they become vacant. There concern for the industry. As noted earlier in this report, there has been a reduction of tenants entering administration in recent
are a number of recent examples of repurposing executed successfully, however it can be a capital intensive process.. months, despite Australia being in an economic recession, and this trend is expected to reverse once a number of tenant and retailer
Whilst returns can be low for repurposing large vacant tenancies, such projects allow landlords to replace under- protection and support measures are removed.
performing tenants with an increased ‘daily needs’ tenant offer, differentiating the centre from its competitors. The
Despite the challenging retailing conditions, some retailers have performed well over the last 12 months, not only in terms of
closure of one level of David Jones at Highpoint Shopping Centre and backfilling with Kmart, the announcement
achieving strong online sales growth, but also achieving like-for-like physical store sales growth. The below graph outlines a
that H&M will close three Australian stores and the well publicised Target and Big W closures are current examples.
selection of those retailers that have reported turnover growth both online and in their physical stores. Whilst is it encouraging
Other recent examples of repurposing include the following:: that retailers could grow instore sales during a pandemic where stores were forced to close and consumers were discouraged or
prevented from shopping, the growth in online sales for these retailers still far outperformed instore sales.
» Auburn Central - Big W occupied a 7,159 square metre
tenancy within Auburn Central leased until 2024. Big Growth between 1H FY 2020 vs 1H FY 2021
W surrendered their lease in 2020 and redevelopment 180%
162%
of the vacant tenancy allowed the addition of ALDI 160%
and Tong Li supermarkets to the centre in addition to
further speciality tenancies. This increased the WALE, 140% 128%
better orientated the offer to the catchment, and moved 120%
the centre from a sub-regional with DDS exposure to a Auburn Central, NSW 102%
% Growth
100% 95%
triple anchored neighbourhood centre. 87%
80%
» Harris Farm - A former Bunnings Warehouse in the 60%
Albury CBD which Bunnings vacated in 2018. The
building has been repurposed for a 4,450 square metre 40%
Harris Farms supermarket which opened in early 2021 16% 17%
20% 12%
and with early reports it is being well received by the 5% 6% 8% 5%
local community. 0%
Adairs Universal Super Retail Domino's JB Hi Fi Michael Hill
Stores Group
Harris Farm, Albury, NSW Store Sales Online Sales
Source: m3property and Company Annual Reports
» Woolworths - A former Kmart freestanding tenancy.
Kmart did not exercise their option term due in 2020 Landlord Technology Innovations
and the landlord secured Woolworths to relocate to » The height of COVID restrictions saw landlords » AMP Capital’s shopping centres are the first retail
the building, converting the asset from a less favoured exploring innovative solutions to have customers return portfolio in Australia and New Zealand to be mapped
freestanding DDS to a freestanding supermarket, which and engage with their centres. At Chadstone, Vicinity internally for Google Street View. With increased
are keenly sought in the market. Centres launched a new digital Parcel Concierge ‘mission shopping’ – shopping in a more planned/less
service, giving customers the opportunity to shop at browsing way, Google Street View enables customers
Woolworths, Bairnsdale, VIC participating retailers and brands with a single drive- to virtually tour the centre before they leave their home.
thru collection point. The Parcel Concierge platform is This helps customers plan their shopping journey and
integrated with each participating retailer’s website to familiarise themselves with their chosen centre ahead
» HomeCo - There have been numerous examples of ensure a seamless digital experience. Scentre Group of time.
large vacant tenancies being reconfigured throughout also announced their own drive-thru click and collect
the HomeCo portfolio. Since acquiring the vacant service known as ‘Westfield Direct’ across its portfolio
former Masters buildings in 2016. HomeCo has listed of Westfield Living Centres, enabling customers to
on the ASX with a ‘Daily Needs’ portfolio of converted purchase products online from multiple Westfield
Masters buildings and other acquired centres with a retailers in one transaction and pick them up from the
total asset value of circa $1 billion. convenience of their car via a contactless drive-thru
HomeCo, Nationally location at their local centre.
| Page 8 Page 9 | An Eye to 2021Transaction Analysis - Reflecting on 2020 Transaction Volume By State - 2020
» Transaction volumes were substantially reduced » The reduced volumes reflect vendors not wanting SA, Others,
during 2020, with the reduction largely due to fewer to sell in an uncertain market and buyers being wary $254,255,000, $44,000,000,
5% 1%
regional, sub-regional and CBD assets transacting. of retail assets in a challenging retail environment,
WA,
especially considering capital contraints and $329,010,000,
» These centre categories were the most impacted
border closures inhibiting inspection opportunities 7%
by the pandemic in terms of reduced discretionary
for interstate and global investors.
spending, conversion to online spending, business
hibernation and social distancing measures.
West Place, Churchill, VIC
QLD, m3property advised a bidder
$851,696,000,
18% NSW,
Transaction Volume by Centre Type $2,463,645,00
0, 51% » NSW contributed a large proportion of 2020
$9,000 transactions boosted by a number of neighbourhood
$8,188 centres selling, including high value neighbourhood
$8,000 $7,553 $7,673 VIC, centres Glenmore Park ($150m), Baulkham Hills
$886,383,000,
($140m), Auburn ($112m) along with the David Jones
$7,000 $6,645 18%
CBD store ($500m).
$6,000 » Victoria’s sale volume was largely supported by
CBD assets, neighbourhood centres and a single
$5,000 sub-regional sale.
$4,195
Millions
$4,000
Undisclosed,
Transaction Volume by Purchaser - 2020 $474,551,000,
$3,000
10% A-REIT,
$1,140,100,000,
$2,000 » Institutional purchasers were dominated by 24%
‘daily needs’ focused players including HomeCo Unlisted Fund,
$1,000 $875,450,000,
($432m), Prime West ($243m), SCA ($163m) and 18%
Charter Hall ($953m).
$0 Developer,
2016 2017 2018 2019 2020 $479,800,000,
10%
CBD Regional Sub Regional Neighbourhood Large Format Retail
Syndicate,
$544,320,000, Foreign Investor,
11% $46,150,000, 1%
Owner Occupier,
Transaction Volume by Vendor - 2020 $6,600,000, 0%
Transaction Volume Distribution - 2020 Private Investor,
$1,262,018,000,
26%
Unlisted Fund, A-REIT,
» The volume of sales of Large Format Retail assets $327,765,000,
CBD, $499,350,000,
Large Format $1,048,600,000, was significantly boosted by a large number of 7% 10%
Retail, 25% Undisclosed,
Bunnings transactions including a $353 million » Foreign investor vendors included Woolworths
$1,110,930,000, $685,296,000,
26% portfolio acquired by Charter Hall Long WALE 14% Holdings (David Jones), JP Morgan, CBRE Global
Developer,
Investment Partnership. Investors.
$462,220,000,
» A large number and volume of neighbourhood Syndicate, 10% » AREITs Stockland, Charter Hall and Vicinity divested
centres transacted. These assets were keenly $159,050,000, centres and supermarket operators Coles and
sought by investors as a defensive asset during 3% Woolworths continue to divest centres they have
Sub Regional,
$694,000,000, the pandemic, favoured by the strong anchor Foreign
developed as the centres reach maturity.
17% Investor,
tenant supporting the income profile and the non-
$1,126,650,00
discretionary nature of the tenant composition. Private 0, 23%
Neighbourhood,
$1,341,945,000,
Investor,
32% $1,347,608,00
0, 28% Owner
Occupier,
$221,050,000,
5%
| Page 10 Source: m3property Page 11 | An Eye to 2021Bunnings In Demand m3property Consultancy
The market’s recognition of the attractive Bunnings
lease covenant and fixed rental increases has resulted
in yields for Bunnings Warehouses falling in recent
years. The below graph outlines this trend over the last
four years with the trendline indicating a circa 100 basis
point tightening in market yields. Bunnings are one of
the few major retail tenants that have fixed annual rental
increases with most other major retailers having rent
increases subject to turnover rent thresholds, which adds
risk to income growth in a low inflation environment with
subdued retail spending, particularly when ‘bricks and Bunnings Modbury, SA
mortar’ retailing is losing market share of turnover to
online retailing. Many of the assets that have sold also m3property assisted a potential purchaser
feature modern structures that provide tax depreciation Source: Colliers
benefits to the owner.
m3property assisted a prospective m3property
Pemulwuy, is currently
NSW assisting
Bunnings Yields
purchaser during the recent sale a prospective purchaser with the
7.00%
campaign of Watergardens Home, potential acquisition of Mercato
VIC Byron Bay, NSW
Jun-19
Aug-16
6.50%
6.00% Aug-17
Sep-18
5.50% Nov-19
Apr-19
Dec-16
Sep-17
Jul-18 Oct-18
Dec-20
5.00% Mar-19 Oct-20
Aug-19
4.50%
4.00%
Warragul
Aracacia Ridge
Doncaster
Kingaroy
Colac
Lake Haven
Albury
Coffs Harbour
Bonnyrigg
Toowoomba
Smithfield
Bonnyrigg
Seven Hills
Gladesville
Virginia
Bathurst
McCracken
Clyde North
Kempsey
Lawnton
West Footscray
Bairnsdale
Port Macquarie
Palmerston
Warwick
Pymble
Underwood
Windsor Gardens
Preston
Robina
Bendigo
Caringbah
Orange
Caringbah
Mernda
Rockhampton
m3property assisted a bidder m3property is assisting a
during the recent sale campaign of prospective purchaser with the
Source: m3property
Ropes Crossing Shopping Centre, acquisition of Bellarine Village, VIC
NSW
| Page 12 Page 13 | An Eye to 2021CBD Centres Regional Shopping Centres
» Whilst Melbourne and Sydney CBD markets have been » For the first time in a number of years, no Regional Shopping Australian
significantly impacted by reduced office workers, local Centres transacted during 2020. Opportunities to acquire
and international students, domestic and international
partial interests will present during 2021 and with the risks regional
tourism, and lower migrant populations, interestingly,
of supporting retailers during a COVID lockdown subsiding,
shopping
the risk to income profiles will be less than in 2020. However,
a number of key CBD assets transacted during 2020 the market will be keen to see the impact of retailer failures, centres xxxxxxx.
with these assets generally reflecting ‘value add’ store network rationalisations, rising vacancies and changing
St Collins Lane, Melbourne opportunities. This highlights investor confidence in consumer spending patterns on income. Income support and
the long term future of CBD’s. downward pressure on rents will put pressure on forward cash
m3property assisted the purchaser At Indooroopilly Shopping Centre in
flows.
» Early indications are that whilst pedestrian volumes are still
Brisbane’s inner-west, AMP Capital has
KEY TRANSACTIONS 2020 below pre-COVID levels, retail spending is growing more secured a lease with Eagers Automotive
D AV I D J O N E S D AV I D J O N E S strongly than pedestrian volumes, indicating that consumers, to establish an AutoMall in the centre.
ST COLLINS LANE
MELBOURNE SYDNEY when frequenting centres are doing so with a purpose to
VIC Expected to open December 2021,
VIC NSW spend and / or are spending at greater levels.
Sale Details » Landlords will be faced with the challenge of enticing the AutoMall will incorporate a 12-bay
Sale Price Circa $120,000,000 $121,000,000 $510,000,000 consumers back into centres. against rising online spending. roof-top ‘Quick Service’ facility, and a
Experiential retail is seen as a way to attract consumers
Sale Date July 2020 April 2020 December 2020
state of the art 2,400 square metre car
to centres. Two examples of this are at Indooroopilly and
Sunshine Plaza Shopping Centres as shown on this page.: sales showroom. The AutoMall replaces
Purchaser Vantage / Credit Suisse Newmark Capital Ltd Charter Hall
existing specialty tenants to Level 3 and
Physical Characteristics
is a first to market concept, reflecting
GLAR (m2) 9,283 11,814 31,875
the evolving nature of shopping centres.
No of Specs 49 – -
Lease Expiry
Centre WALE (Income) 2.69 years 3.00 years 20 years
Income Profile
Centre Vacancy 52% - Nil
Investment Parametres The outdoor high ropes course and zip line
Passing Yield Circa 5.00% 3.72% 5.00%
at Lendlease’s Sunshine Plaza Shopping
Centre. This is an example of retail landlords
Equated Market Yield Circa 5.50% – 5.00%
adapting their assets to increase the
Internal Rate of Return Circa 7.00% – Confidential customer experience and dwell time.
GLA rate/m² Circa $13,000 $10,242 $16,000
“ We expect the recovery of the CBD property market to
be slow until office workers return to the CBD in significant
capacity and until cross border domestic and international
travel has recovered”
| Page 14 Page 15 | An Eye to 2021Sub-Regional Neighbourhood
Shopping Centres Shopping Centre
» A diverse range of Sub-Regional centres transacted » After a slow start to 2020, the neighbourhood shopping
over the last 12 months. The broad range of analysed centre category finished the year very strongly, in
yields (circa 6.25% to 8.25%) is reflective of the market’s particular in NSW with a large number of centres
perception of the differing income risk profile between
prime and secondary Sub-Regional centres. Most Stockland Caloundra, QLD
transacting. Broadly speaking investment yields
tightened within this asset category as investors were
Caddens Corner, NSW
Sub-Regionals to transact were in the $100m to $150m attracted to the secure income streams of the anchor m3property assisted a bidder
range. tenants and non-discretionary / daily needs retailers
that performed well during the pandemic. Institutional
owners Rockworth Capital, HomeCo and Primewest
were acquisitive during the year.
STOCKLAND THE PINES STOCKLAND CALOUNDRA ROPES CROSSING CADDENS CORNER COOMERA
VIC QLD NSW NSW QLD
Sale Details Sale Details
Sale Price $155,000,000 $97,000,000 Sale Price $42,000,000 $79,000,000 $57,000,000
Sale Date July 2020 September 2020 Sale Date October 2020 December 2020 November 2020
Haben & the JY Group Purchaser Rockworth Capital Partmers Holdmark Property Group Home Consortium
Purchaser Haben
(Joint Venture)
Physical Characteristics
Physical Characteristics
GLAR (m2) 5,805 9,544 7,422
GLAR (m )2
25,109 17,387
Lease Expiry
Lease Expiry
Centre WALE (Income) 9.19 years 9.75 years 7.44 years
Centre WALE (Income) 3.44 years 2.18 years
Investment Parametres
Investment Parametres
Passing Yield 5.59% 5.03% 5.72%
Passing Yield 7.31% 7.17%
Equated Market Yield 5.50% 5.02% 5.64%
Equated Market Yield 6.53% 6.69%
Internal Rate of Return 6.56% 5.98% 6.50%
GLA rate/m² $6,372 $5,579
GLA rate/m² $7,235 $7,177 $7,680
Melbourne Square, VIC
Stockland The Pines, VIC
It was purchased by Primewest for $70 million
| Page 16 Page 17 | An Eye to 2021Freestanding Supermarkets Large Format Retail
» Investor demand for income security has driven capital to » Investors keen on the sector had limited stock to choose
this sector, resulting in increased pricing and lower yields. from with few LFR assets offered to the market during 2020.
Requirements for retailers to record lease liabilities has had Many LFR tenants performed well during the pandemic,
the consequence of Coles and Woolworths seeking shorter including homewares, sporting goods, auto parts, and
initial lease terms. Where 15 and 20 year lease terms were
previously standard, recently the supermarkets operators Drakes Foodland, Salisbury, SA
outdoor recreation retailers. With management being
relatively straight forward and the assets residing on large
Ballarat Lifestyle Centre, VIC
have looked to 12 and then 10 year initial terms with there m3property assisted the purchaser tracts of land, private investors, along with a defined group of m3property assisted the purchaser
being no repricing of assets by investors for the shorter institutional investors participate in the sector.
terms. There is often insufficient yield premium applied to
assets that have limited income growth potential or limited
redevelopment opportunities.
T O R Q U AY W O O LW O R T H S DRAKES FOODLAND H O M E B A S E WA G G A DAN MURPHY’S B A L L A R AT
VIC SA WA G G A WA N G A R AT TA LIFESTYLE CENTRE
NSW VIC VIC
Sale Details
Sale Details
Sale Price $23,100,000 $11,100,000
Sale Price $46,000,000 $8,100,000 $12,392,100
Sale Date December 2020 January 2021
Sale Date November 2020 August 2020 December 2020
Physical Characteristics
Physical Characteristics
Location from CBD (kms) 105 30
Location from CBD (kms) 453 259 121
GLAR (m2) 2,980 2,133
GLAR (m2) 20,312.2 1,279 3,765
Lease Expiry (Years) 3.83 11.83
Lease Expiry
Investment Parametres
Centre WALE (Income) 4.13 11.36 years 5.53 years
Passing Yield 3.90% 4.82%
Investment Parametres
Equated Market Yield 3.90% 4.94%
Passing Yield 7.20% 4.13% 6.09%
Internal Rate of Return 2.36% 6.87%
Equated Market Yield 7.02% 4.13% 5.57%
GLA rate/m² $7,752 $5,204
Internal Rate of Return 7.23% 4.86% 6.53%
GLA rate/m² $2,265 $6,333 $3,291
Woolworths, Torquay, VIC Coles, Woodend, VIC
HomeBase, Wagga Wagga, NSW Dan Murphy’s, Wangaratta, VIC
Sold m3property assisted a potential purchaser
| Page 18 Page 19 | An Eye to 2021Outlook and Opportunities m3property In the News
• International Attraction- Australia’s handling of the global pandemic has increased the
standing of the market to international investors. The Australian property market
was already viewed as quite transparent with relatively stable returns. However, without local
operatives, challenges exist for international investors wanting to participate in the market whilst
international travel is restricted.
• Retail Spending - the discretionary market was buoyed by ‘revenge spending’ following the
cessation of various State ‘lockdowns’, but the depth of this spending is likely to be limited into 2021.
Other retailers that performed quite well during 2020 such as hardware, homewares, supermarkets,
sportswear, and home office supplies are expected to face more modest revenue growth in 2021.
Consumers will continue to be attracted to shopping local, driven by convenience and loyalty.
• CBD Headwinds - the CBD markets will be slowest to recover with COVID outbreaks continuing
to stall and disrupt the recovery. Further to that, border restrictions impact tourism, migrant
population and student populations, which are key drivers for CBD retail.
• Working from home - the decentralisation of office accommodation will create the potential
for hub style developments and satellite offices in suburban centres, incorporating amenity
.and service rich co-working environments. Shopping centres are well placed to cater to these
requirements.
• Sub $100m Strength - the market will remain strong for well leased, stable assets with values
under $100 million.
• Sub-Regional Opportunities - attractive yields and value add opportunities for secondary
assets may attract some investor attention but income profiles will need to be stable.
Sub-regional centres on large tracts of metropolitan land with mixed use potential will be the
most favoured of this asset class.
• Capital Intensive - defensive capital will be required to maintain income profiles of discreationary
based centres.
• Rising Vacancies - vacancy rates will likely be impacted by the removal of various Government
introduced tenant protection measures and by continual tenant store rationalisation strategies.
• Lease Structures - tenants will push for turnover based leases, with landlords resisting due
to the lack of cash flow security and because they do not consider they should underwrite the
performance of retail businesses. Further to that, Landlords will push to capture a percentage of
online turnover that may be generated by ‘bricks and mortar’ experiences.
• Cinema Challenges - The recovery of cinemas remains challenged with the advent of straight to
stream services and the removal of exclusivity periods. Cinema operators will need to focus on
an enhanced experiential offer to remain relevant and attractive. Cinemas were greatly impacted
by COVID-19 social distancing requirements and the lack of Hollywood ‘blockusters’ due to the
impact of the pandemic on the film industry.
| Page 20 Page 21 | An Eye to 2021
| Page 20Our Services
Retail Valuations & Advisory
m3property has a reputation for providing independent and trusted valuation
advice to our institutional, private investor and financier clients.
Our team operates across Australia delivering quality valuation and consultancy advice. Our Retail Valuation
& Advisory Team is supported by our national research capability with representation in each state,
m3property offers a diverse range of valuation services covering:
• Mortgage Security Valuations • Asset Reporting
• Portfolio Valuations • Feasibility / Development Advice
• Consultancy Advice • Rental Determinations / Advice
• Acquisition Valuations / Due Diligence • Expert Witness Engagement
• Rating & Taxation consultancy • Food & Beverage Master Planning
Our team
Shaun O’Sullivan Don Semken
VIC | DIRECTOR NSW | DIRECTOR
+61 418 644 330 +61 433 222 956
shaun.o’sullivan@m3property.com.au don.semken@m3property.com.au
Simon Hickin Duane Gilliland
SA | DIRECTOR QLD | DIRECTOR
+61 8 7099 1812 +61 401 955 609
simon.hickin@m3property.com.au duane.gilliland@m3property.com.au
Nicholas Dreyer Andrew Cash
SA | MANAGING VALUER NSW | VALUER
+61 400 186 006 +61 412 297 317
nicholas.dreyer@m3property.com.au nicholas.dreyer@m3property.com.au
Donald Tse Amy Angelopoulos
VIC | VALUER VIC | VALUATION ANALYST
+61 421 728 202 +61 3 9605 1037
donald.tse@m3property.com.au amy.angelopoulos@m3property.com.au
Jayden Maurer Louis Beinke
QLD | VALUATION ANALYST SA | VALUATION ANALYST
+61 7 3620 7920 +61 8 7099 1800
jayden.maurer@m3property.com.au louis.beinke@m3property.com.au
Jennifer Williams Amita Mehra
NSW | NATIONAL DIRECTOR RESEARCH VIC | DIRECTOR RESEARCH - F&B
+61 400 116 343 +61 400 355 667
jennifer.williams@m3property.com.au amita.mehra@m3property.com.au
Casey Robinson Zoe Haskett
QLD| DIRECTOR RESEARCH SA | MANAGER RESEARCH
+61 439 751 773 +61 402 056 388
casey.robinson@m3property.com.au zoe.haskett@m3property.com.au
m3property.com.au /m3property
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