Port Village for sale in $200m retail portfolio

Real Estate

Howard Salkow

Senior Journalist

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Port Village is one of five neighbourhood centres for sale. Image: Supplied

In what has been described as ‘massive’ and among the bigger purchasing offers in the shire, Port Village is up for sale along with four neighbourhood retail centres across the country.

JLL (Jones Lang LaSalle), a leading professional services firm that specializes in real estate and investment management, is bringing a portfolio of five neighbourhood convenienced-based retail assets to market, which also includes Brassall Shopping Centre, Brassall, QLD; Primewest Dernancourt, Dernancourt, SA; Tyne Square, Perth, WA and Fairview Green, Fairview Park, SA. Collectively, the five neighbourhood centres are valued at $200million.

JLL has been exclusively appointed to lead an Expressions-of-Interest campaign for The Australian Neighbourhood Portfolio.

Primewest, a Centuria Capital Group subsidiary, is divesting the assets whose related unlisted funds have reached their maturity.

“This is massive, but not unusual,” said David Cotton, Director and Licensee, Raine&Horne, Port Douglas.

“I don’t believe it will have any affect on the town. The purchaser will run it the same way it is being run now. Shopping centres are usually purchased by trust funds, hedge funds, etc.

“There is still demand for retail shops and will be for a long time, especially in tourist towns like Port Douglas. It is in a great location and has blue chip tenants like Coles and Kmart, which is very attractive when purchasing shopping centres,” said Cotton.

Port Village was purchased in 2014 by Prime West Funds for $25,259,000.

Elevated interest

JLL’s Retail Investments (Australia) Senior Director, Nick Willis said, “Interest in these convenience-based neighbourhood centres remains elevated, however, this demand has been met with significant constrain of investment supply in 2022.

“We have seen a shift in investor demand looking to increase weighting to the sector, however, this remains difficult in what is a highly fragmented sector. This portfolio provides a very unique opportunity for an investor to gain immediate and diversified scale.

“In addition to the attraction for larger portfolio buyers we also anticipate strong demand on individual asset basis given their unique and attractive propositions,” said Mr Willis.

Mark Flinn, Selling Principal, Ray White, Port Douglas, said when he heard of the sale, it did not surprise him.

No surprises

“Nothing surprises me in this current market, but considering it was sold not that long ago the news was unexpected,” he said. In terms of the price tag, he said the market will determine where it sees the value on a yield basis.

Flinn said he did not see that much will change for Port Douglas.

“The investors who buy these types of assets don't generally get involved in the community.

“However, we would like to see the remaining empty retail spaces leased with new business opportunities and employment for the shire and to bring back to life the Port Village precinct as a once again thriving hub of Macrossan Street,” said Flinn.

Neighbourhood centre investment activity in 2021 was at record levels, with 58 transactions totalling AUD $2.9 billion. This was a record year for the sub-sector by a significant margin, and a substantial increase from AUD 1.5 billion recorded in 2020.

Transaction activity

JLL’s Joint Head of Retail Investments (Australia), Sam Hatcher said, “Transaction activity is being driven by a range of capital sources, with private investors and syndicators actively acquiring these assets to capitalise on the low cost of debt, and this is expected to continue in the short term while interest rates remain at record lows.

“Yields for the sub-sector have been resilient given the liquidity in the private investor and syndicator market, combined with resilient performance of fundamentals through the COVID-19 crisis in terms of MAT and rent collections.

“Population growth is a key long-term driver of food retailing which underpins convenience retail assets. While border closures weighed on population growth in the short term, Australia is forecast to have one of the strongest rates of population growth among developed countries over the next five years,” said Mr Hatcher.

Australian retail is regaining lost momentum caused by the peak of the Omicron outbreak in January. Retail turnover rose 1.8 per cent in February 2022, seasonally adjusted, according to the Retail Trade figures released in late March by the Australian Bureau of Statistics (ABS).

** Port Village extends from Coles, Kmart and all the shops along Macrossan Street to Grant Street. 

 

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