Charter Hall Retail REIT has bought the 24,000sqm Salamander Bay Centre in the Port Stephens region, New South Wales, for $174.5 million.
The acquisition of the single level shopping centre located in the northeast of Newcastle reflects a six per cent capitalisation rate.
According to Charter Hall, the transaction is consistent with a strategy to transition its portfolio from smaller non-core assets towards larger convenience based supermarket anchored shopping centres.
The property firm said the centre benefits from low levels of direct competition within its captive trade area along with a resident population of 36,000 and strong tourism sector trade.
Coles, Woolworths, Kmart, Aldi, and Target Country anchor the centre in addition to three mini majors, 64 specialty tenancies, nine kiosks, and six ATMs. The major anchor tenants are either trading with turnover in excess of their percentage rent thresholds or are expected to pay percentage rent within the initial investment horizon.
“We are pleased to announce the strategic acquisition of the Salamander Bay Centre to our portfolio,” said Scott Dundas, fund manager of the REIT. “This acquisition reflects our focus on our stated strategy to reduce exposure to smaller retail assets in order to acquire larger, higher growth assets.”
Dundas said the investment into the Salamander Bay Centre aligns with Charter Hall’s investment strategy and follows the company’s recent acquisition of Arana Hills Plaza in the fast growing metropolitan Brisbane suburb of Arana Hills.
“Strategic asset locations, convenience based, dominance within the trade area, and a diverse mix of strongly performing anchor tenants are recurring themes across our resilient non- discretionary retail portfolio,” he said.
According to the company, as part of its strategy, it has flagged further divestments in order to support the acquisition of larger, forecast higher growth assets and value accretive development. During the December quarter, the fund contracted to divest three non-core properties in Queensland and Victoria for a combined value of $72.2 million, which reflected a 10.4 per cent premium to the June 2016 book values at a combined yield of 5.6 per cent.
“With the recent divestments above book value we are focused on active asset management and our prudent capital management means we are delivering on our strategy to enhance the quality of the CQR portfolio through strategic acquisitions, divestments and redevelopments,” Dundas said.
The acquisition will initially be funded through a combination of existing and new debt facilities. It is anticipated that these debt facilities will be repaid through planned divestments.
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