Sydney-based Revelop is again on the expansion path in the city, picking up a shopping centre in Balgowlah from listed developer Stockland for about $155m.
The deal continues its run of purchasing in the belief that retail property trade will keep defying the consumer spending slowdown and that property values will start to revert to stronger levels.
Revelop has snapped up Stockland Balgowlah, a well known neighbourhood shopping centre, as part of its strategy of buying metropolitan assets in growing areas.
The deal, brokered by JLL's Nick Willis and Sam Hatcher, shows relatively tight metrics and that competition for centres is rising, even as big companies are offloading assets.
Savvy buyers such as Revelop have been picking up assets from listed groups, including Mirvac, from which it bought Stanhope Village in Sydney's northwest and Tramsheds Sydney in inner-city Forest Lodge.
It is now expanding at a time when competition for assets is expected to intensify later this year as interest rates stabilise.
Stockland Balgowlah is on the northern beaches near Manly and traded on a yield of about 5.75 per cent. The 12,802 sqm centre was developed by Stockland in 2002 and is part of a large luxury mixed-use development. The centre is anchored by Coles and Harbord Growers Market, and houses Fitness First, and 54 speciality shops including dining, fashion, and healthcare. The centre's strong performance is attributable to the affluent demographic surrounding the asset.
Revelop is owned by Anthony El-Hazzouri and Charbel Hazzouri, who said the trophy asset had strong synergies with their surrounding centres. They said it would work well with their Forestway Shopping Centre in the northern beaches, with that centre going through a significant expansion.
“Core metropolitan assets within proximity of Sydney CBD rarely trade and continue to be highly sought after by all capital given their irreplaceable nature,” JLL's Mr Willis said.
JLL noted that there was a significant surge in private investor participation during the fourth quarter of 2023 for retail property.
“In December alone, over $850m (in) shopping centres in Australia were transacted to private investors, almost double the prior year and significantly above the five-year average,” Mr Willis said.
“These investors along with unlisted funds and syndicates are well capitalised and looking to allocate to the sector, however, available investment supply remains subdued in the first quarter of 2024, this is driving increased bidding competition,” he said.
JLL's Mr Hatcher said for the first time since 2004, retail investments recorded the largest market share in transaction volumes. “The underlying fundamentals of retail investments have continued to improve,” he said.
“The lack of new floor space supply and strong population growth, alongside attractive returns in comparison to other traditional asset classes, are attracting domestic and international investors alike.”
Stockland bought the centre in Balgowlah in 2001 and its cost, including additions was $141.3m. It was refurbished in 2007, and it was valued at $157m in June 2023.
*** Credit - Realcommercial.com.au - Ben Wilmont ***