Retail investment in Cannon Hill with 6.51% passing yield appeals to local investor
Southgate Shopping Centre in Cannon Hill has sold for $7.15 million to a Brisbane based investor with a passing yield of 6.51 per cent.
The property located at 29 Southgate Avenue Cannon Hill features 1,682sqm net lettable space and is currently tenanted by Coffee Club, IGA, Brumbies, Battery World, Bossy Hair, a sushi restaurant and a Greek restaurant.
The centre, developed by the Anthony John Group in 2007, brings in a net income of $669,968 net per annum and currently has 510sqm of office space available for lease on the first level.
Guy Stafford and Philip O’Dwyer from Colliers International sold the property off market on behalf of a private interstate owner. Mr O’Dwyer said that as Colliers International was appointed to market the office for lease. “We were exploring solutions for the owner to resolve the situation and allow him to exit the property so that he could consolidate his interests back to NSW.
“The opportunity was promoted to a number of local and interstate investors that we have been working with for some time who we felt would find this type of investment appealing. The most motivated buyer was an experienced local property investor who was looking for a property with an upside and diverse tenant structure.
“The purchaser was prepared to take on some leasing risk with one vacant tenancy and saw strong value at a passing yield of 6.51 per cent. He has backed himself and our leasing team to secure a new tenant under his ownership. We expect that the property will produce a yield of around 8.5 per cent once the vacancy is filled, even at currents soft rents.
“Fully leased assets of this nature are scarce, especially in a prime location like Southgate Corporate Park, and the low yields that are being achieved are representative of this.
“In this case we were able to utilise our extensive network of private investors to achieve the desired result for the vendor, and place the property into the hands of a new owner who has a great understanding of the dynamics of the Brisbane property market and a long term view for his investments.”