A Neighbourhood Shopping Centre in Newcastle has been purchased by a Newcastle-based syndicate for $7,500,000, reflecting a sharp initial yield of 4.4%.
The Neighbourhood Centre located in Maryland, a suburb experiencing major residential growth and located 12 kilometres northwest of Newcastle's Central Business District, attracted strong interest from eastern seaboard investors.
The transaction was negotiated by Colliers International’s Mitch Noonan, Matthew Meynell and Adam Leacy, along with Stonebridge agents Lincoln Blackledge, William Blanch and Kelly May.
“The record number of bids on this asset was a result of a well-positioned asset benefitting from strong underlying fundamentals, combined with an unprecedented amount of capital willing to move from passive investments into repositioning projects in order to extract attractive returns,” said Mitch Noonan, Associate Director at Colliers International.
“This was a strong result to kick off 2017 and confirms the amount of interest in the burgeoning Newcastle and Hunter Valley area,” said Adam Leacy, Director at Colliers International.
The centre provided 4,985sqm of retail area on a 1.39 Ha site and was sold under instructions from PPB Advisory, acting as receiver and manager.
“The Shopping Centre has experienced a chequered past following the departure of Bi-Lo as the anchor tenant,” said Ken Whittingham, Partner at PPB Advisory.
“The Receivers had to remove tenants that were not paying the rent and offer rental assistance (abatements) to more established tenants to assist them while they sought replacements. In that period both Coles and Aldi constructed new facilities within 3km. PPB managed to combine three vacant shops and locate a Medical Centre Operator in order to create foot traffic. PPB also leveraged the established Colliers and Stonebridge networks to locate a buyer."
Lincoln Blackledge, Director, Stonebridge Property Group said, “The fierce competition and robust result for the Maryland campaign are primarily a response to the strong fundamentals of the offering but are also symptomatic of the scarcity of value-add opportunities with the benefit of holding income in NSW at present.”
The site was purchased by a Newcastle based syndicate, who said they had big things planned for the centre.
“An initial investment of $3,000,000 has been allocated for improvements in the short to medium term,” said Gavan Reynolds, a spokesperson for the new owners.
“For too long now the asset has been neglected and the local community and existing retailers deserve better.”
“We have friends and family that live in this area and know firsthand that it is in desperate need of a quality local retail centre.”
“The area has seen a significant increase in the amount of housing and it just continues to grow so having local retail and services in this area is essential to these neighbourhoods reaching their potential.”