Land­lords off­load shop­ping cen­tres

Warwick Daily News - - RESIDENTIAL RESIDENTIAL - WORDS Ben Wil­mot

TOUGH re­tail con­di­tions are spilling over into the port­fo­lios of ma­jor land­lords with listed com­pa­nies sell­ing a series of cen­tres at dis­counts to their book val­ues, ac­cord­ing to a new anal­y­sis by Mac­quarie Eq­ui­ties.

The mar­ket is be­ing re­set as land­lords off­load un­wanted cen­tres, with Stock­land last month sell­ing a cen­tre in the re­gional NSW town of Bathurst and an­other on the Sun­shine Coast at a 5 per cent dis­count to their pre­vi­ous val­ues. The sales were con­sid­ered by ex­perts to be in line with their mar­ket worth and other sim­i­lar as­sets that real es­tate in­vest­ment trusts have long tried to un­load.

Mac­quarie Eq­ui­ties es­ti­mated that more than $1bn of neigh­bour­hood and sub­re­gional shop­ping cen­tres had sold in the past three months and they showed a 3 per cent dis­count to their book val­ues.

The bro­ker nom­i­nated Wool­worths and Coles-fo­cused land­lord SCA Prop­erty Group as the most ex­pen­sive listed re­tail trust, say­ing it was at a 20 per cent premium to its net tan­gi­ble as­set back­ing, well ahead of the re­tail sec­tor av­er­age of a 5 per cent dis­count.

Sub­re­gional cen­tres are sell­ing at a greater dis­count to book value than ear­lier in the prop­erty cy­cle.

Mac­quarie Eq­ui­ties says smaller, con­ve­nience-based neigh­bour­hood as­sets have traded at a slim 2 per cent dis­count to book val­ues.

There is rel­a­tively strong de­mand for neigh­bour­hood cen­tres in auc­tion rooms with many sell­ing on yields at be­low 5 per cent as they are viewed as rel­a­tively pro­tected from the im­pact of e-com­merce.

Slightly larger cen­tres that have dis­count de­part­ment store or de­part­ment store an­chors are mainly be­ing bought as value-add or repo­si­tion­ing plays by groups with higher re­turn hur­dles that are de­mand­ing lower pur­chase prices.

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