Singaporean Fund Pays $88m for Shepparton Retail Centre

Private investors’ appetite for Australian regional retail is staying keen with a Singaporean fund paying a shade over $88 million for a regional Victorian centre.

Singapore-based private real estate fund manager partnership Sim Lian–Metro Capital acquired Shepparton Marketplace for $88.1 million, picking up the centre from Dexus Wholesale Property Fund.

Dexus paid a private investor about $70.6m for the centre, about 180km north-east of Melbourne, in 2014.

CBRE’s Simon Rooney and James Douglas negotiated the off-market sale.

Rooney said the campaign had attracted strong private and institutional investor interest, with the sale price reflecting a capitalisation rate of 6.25 per cent.

“The level of buyer interest in Shepparton Marketplace demonstrates the continued depth of demand for quality sub-regional shopping centre assets, particularly centres offering value-add opportunities,” he said.

“There is immediate potential to undertake a targeted remix of the centre’s speciality tenants and to enhance the casual dining offer, while the large 122,900sq m site includes 61,700sq m of vacant land, providing significant scope for future development opportunities.”

The existing 16,535sq m centre is anchored by Woolworths and Big W stores on leases until 2030 with further options.

It is the dominant sub-regional centre serving regional Victoria’s fifth largest city.

The centre is accessed from the Midland Highway and is near national retailers, including Bunnings, The Good Guys, Anaconda and Spotlight.

Rooney said investors were attracted by the centre’s strong combined sales performance and exceptional income security of the major tenants, coupled with the centre’s outstanding specialty productivity of $14,641 per square metre, which was 66 per cent above Urbis benchmark.

▲ The Shepparton Art Museum: the regional centre has experienced a population increase off the back of pandemic-induced migration from Melbourne.

“The centre is situated in an expansive, densely populated trade area with a substantial retail expenditure pool, which is forecast to grow from $1.9 billion to $3 billion by 2036,” he said.

“The centre is also set to benefit from the Shepperton Southeast Precinct Structure Plan, which proposes an additional 2500 homes for the catchment area, accommodating about 6000 residents.”

Sim Lian–Metro Capital paid Mirvac around $132.8m for the Cherrybrook Village Shopping Centre in Sydney last year.

Before the Shepparton deal, it had its foot on properties in NSW, Queensland, Victoria and WA—four office buildings and 12 retail.

Interest in retails, particularly large format, continues to attract private investment as interest rate rises push REITs to scale back.

Colliers head of retail middle markets in Australia James Wilson told The Urban Developer that Colliers had transacted more than $180 million between May and July this year, a 66 per cent increase on the previous three months.

He said at the time that whole rate rises were materially impacting certain sectors, buyers had rallied in the big format retail sector for its development upside and as an inflationary hedge.