Landlords offload shopping centres
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.