The Kings Cross Centre below the iconic Coca-Cola neon sign has been acquired by a private Australian property trust for $37.3 million on a passing yield of 6.9 per cent.
The 4400 square metre centre is anchored by a strongly performing Coles which holds its lease until 2022, with the entire building 98.5 per cent occupied.
According to The Australian Financial Review, the mall was sold through an expression of interest campaign managed by LJ Hooker Commercial Sydney Chief Executive Warren Duncan and agent Stanley Wang.
Negotiating the sale on behalf of Challenger in February 2013 alongside CBRE, Mr Duncan said the centre's prominent position, proximity to Kings Cross train station, and a good tenant mix helped garner the significant interest seen for the site.
Speaking to The Australian Financial Review, he said, "Over the course of the campaign, we fielded more than 150 inquiries, including a strong number of domestic investors. But the weakened Australian dollar has really put our quality retail assets on the radar of international purchasers.
"We've seen yields compress dramatically over the past 24 months in Sydney. Rental income has increased considerably, giving rise to competition for well-leased and well located retail property," he said.
"The Kings Cross Centre is an iconic centre, instantly recognisable to any potential retail tenant," Mr Duncan said.
"The area has undergone immense gentrification through the introduction of premium restaurants, cafes and contemporary apartments. This change is also encouraging enquiry from high-quality retailers.
"Adding to the appeal of the Kings Cross Centre is the fact it's located in one of the most densely populated areas of Sydney, with an estimated 30,000 people living within a square kilometre," he said.