Perth Megaplex sells for $58m despite virus (Australian Financial Review 29 April 2020)
Undeterred by COVID-19, West Australian investor and developer Lester Group has snapped up a large format retail property on the outskirts of Perth for $58 million in an off-market transaction.
Midland Megaplex, a 5-hectare property at 7 Clayton Street in northeast Perth, was sold by the high net worth Humich family on a yield of 6.5 per cent.
The property is leased to 13 tenants, including WA supermarket chain Spudshed, Chemist Warehouse, Spotlight, Fantastic Furniture, Anaconda and Toyworld, and has a weighted average lease expiry of eight years.
The centre has a net lettable area of 20,913sq m and parking for 836 cars. It is located in the centre of Midland's developing large format retail precinct with Western Australia’s largest Bunnings store under construction across the road.
Wayne Lawrence of Colliers International, who brokered the deal, said it was the biggest sale of a large format retail centre in Australia this year.
"The buyers were very happy with the property because a lot of the retailers in this centre are still trading quite well despite COVID-19," Mr Lawrence said.
"But [this sale] is an anomaly... until investors get a clear sense of what the fallout of the virus will be and until after the dust has settled and that's not likely to be for another six months."
"There is still appetite for non-discretionary assets like your neighbourhood centres with a good anchor tenant and no more than five or six speciality shops, it's just that a lot of the retail investors have adopted a wait-and-see approach to assess where the market and values are."
Russell Lester, director of Lester Group, which has a portfolio worth more than $200 million, said the property was offered to a new syndicate, with a $34 million capital raising having been completed in a week.
“The capital raising was quickly oversubscribed, demonstrating a strong appetite by our investors for such an opportunity. The eight-year investment term offers solid income and capital growth from a diverse mix of tenants,” Mr Lester said.
“The tenants were trading well before COVID-19 and although the next 12 months will not be easy trading for any retailer, we will actively work to ensure a fair and equitable outcome for both tenants and investors.”
Mr Lester said the group was looking out for more opportunities on both the east and west coasts.
“We actively look for assets across Australia, seeking the best value, and building a diversified property portfolio to protect and grow value in all economic environments. Right now, the west coast appears to offer some prime opportunities.”
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