Unlisted Investor Secures Golden Grove Shopping Centre in SA


Investment management firm, Challenger Life Company Limited has acquired Golden Grove Shopping Centre in South Australia in a deal worth $129 million.

Golden Grove Village, located 18km north of the Adelaide CBD, is almost fully let at 99.6% occupancy. Anchor tenants include Woolworths and Foodland supermarkets, Big W, The Reject Shop, Dick Smith Electronics along with a further 71 specialty stores.

“There were very high levels of trading activity in sub-regional centres in late 2013, and we’re seeing a second wave occur now," said Simon Rooney, JLL's Head of Retail Investments Australia.

“In addition to completing the sale of Riverside Plaza in June 2014, JLL has a significant pipeline of sub-regional assets and other major assets to transact within the next quarter, with further shopping centres to be brought to the market later this month.

“Sub-regional shopping centres are really dominating retail investment activity at present. Investors are targeting this sub-sector for the attractive yields available, to capture income and value growth and in order to grow their exposure in the retail sector.

“Unlisted funds have been one of the major drivers of sub-regional activity on both the buy and sell side, along with on-going appetite from a growing number of REITs,” said Mr Rooney.

In addition to Challenger Life Company Limited, other unlisted funds that have recently acquired sub-regional centres include Dexus, LaSalle Investment Management, Primewest and Alceon / CPRAM Investments.

“Greater competition for sub-regional assets between unlisted and listed groups is driving yield compression for quality assets, and we expect further compression over the next 18 months as strong capital flows continue,” said Mr Rooney.

JLL Research shows median yields for sub-regional centres nationally tightened by approximately 10 basis points in Q1/2014 to 7.57%, with strong performing centres reaching well below this and attracting yields in the high 6’s.

The spread between the average regional yield (6.08%) and sub-regional yield (7.57%) which has been at 11-year highs is now beginning to narrow. JLL Research shows the spread narrowed from 156 basis points in Q4-2013 to 149 basis points in Q1-2014. The ten-year long term average is just 115 basis points.

“Investors are seeking to capitalise on a narrowing of this abnormally wide yield spread, particularly those that can further enhance returns with capital expenditure and active management,” said Mr Rooney.

Figure 1 – Average Retail Yields (Regional & Sub-regional), 2002 to 2014

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