The Horsham Gateway shopping centre in Victoria’s Wimmera region has been snapped up by a Chinese investor for $14.55 million on a passing yield of 7.9 per cent.
Located at 120-124 Wilson Street, Horsham – a regional town halfway between Melbourne and Adelaide – the centre is anchored by Target and complemented by a further six non-discretionary specialty shops.
Gateway Property Developments built the centre on a 1.21-hectare former gas and fuel site in 2011. The site was marketed with development opportunity -- the centre includes surplus permit-approved development land of 2020 square metres, with scope to expand the asset.
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CBRE Victorian Retail Investments, led by Mark Wizel, Justin Dowers and Kevin Tong, negotiated the transaction of the centre on behalf of a local private developer.
Dowers said the property attracted strong buyer interest from local, interstate and offshore global investors, with the successful purchaser outbidding a number of local private groups, as well as Singaporean funds.
“There is no doubt that investors’ view of Discount Department Stores (DDS) has tapered in recent times off the back of inconsistent performance. However, it was imperative for this campaign to focus on the opportunity of having a large space leased to a major national tenant,” Dowers said.
“The quality of the Target lease covenant remains just as strong as a Woolworths or Coles supermarket, however the rent per square metre is generally substantially less. Furthermore, having 3,000 square metres to 7,000 square metres of retail space currently leased to DDS tenants in prime located centres offers a strategic opportunity for future higher and better use.”
Wizel said the strength of the Wesfarmers-backed tenant generated strong demand from investors -- more than 70 per cent of income is secured via a 15-year lease to ASX-listed Wesfarmers.
“The sale of Horsham Gateway Centre is a very strong statement for the overall confidence that buyers have for retail assets both in regional locations and those that are leased to Discount Department Stores,” Wizel said.
“Over the past 24 months, Chinese investors have spent more than $380 million acquiring shopping centres across Victoria -- highlighting the ongoing strength in investment appetite for well-located assets backed by strong tenancy profiles.”