Bulky goods assets in demand
The US group Blackstone is said to be close to a deal for the $1.6 billion portfolio owned by GE Capital, which includes 60 Carrington Street in the central business district and 99 Walker Street, North Sydney. It has been at least six months since the assets were informally offered.
There is also speculation in the retail sector that Federation Centres, Charter Hall Retail REIT and CFS Retail are considering transactions as they raise capital for new developments.
CFS Retail and Federation Centres report their half-year results this week, after a year of bedding down new projects and a shift in focus.
On Friday, Charter Hall Retail REIT reported a first-half net profit of $45.9 million, marginally ahead of market expectations.
The latest asset to be offered for sale is the homemaker centre Home HQ North Shore, Artarmon, which has a value of about $90 million.
It is being sold by the unlisted Direct Retail Fund, run by Charter Hall, which is also the manager of the listed Retail REIT.
The sale comes after increased demand for bulky goods assets, which has grown substantially in the past 12 months, according to research from Jones Lang LaSalle.
Last year, 15 homemaker centres were traded, totalling $613 million, compared with 11 transactions in 2011, totalling $234 million, representing a 162 per cent increase in value year-on-year.
Simon Rooney, the Australian head of retail investments for Jones Lang LaSalle, and Luke Harris, the manager for NSW retail investment sales at Jones Lang Lasalle, said the average bulky goods transaction size increased to $38.3 million last year from $21.3 million in 2011.
"These figures reflect growing demand for major homemaker centres," Mr Rooney said.
Groups such as Charter Hall are looking to benefit from the renewed investor demand through the sale of assets such as Home HQ North Shore.
"Private investors are taking advantage of this opportune time to acquire high-quality assets at attractive yields with a wide spread to debt costs," Mr Rooney said.
"The bulky goods retail market has been through a period of subdued demand from retailers but the outlook is improving with the drivers of this sector, suggesting a potential recovery over the short to medium term."
He said some signals were emerging to suggest that lower interest rates would stimulate activity in the residential construction and retail sectors.
Frequently Asked Questions about this Article…
The article says at least $1.7 billion of properties are being circled by domestic and international funds. US group Blackstone is reported to be close to a deal for a $1.6 billion portfolio owned by GE Capital that includes 60 Carrington Street in the CBD and 99 Walker Street, North Sydney.
Research from Jones Lang LaSalle shows demand for bulky goods assets has grown substantially over the past 12 months. Analysts say stronger investor interest, attractive yields relative to debt costs and improving sector drivers are boosting demand for major homemaker centres.
Last year 15 homemaker centres were traded, totalling $613 million, compared with 11 transactions in 2011 totalling $234 million — a 162% increase in value year‑on‑year, according to the article.
Yes. Jones Lang LaSalle figures in the article show the average bulky goods transaction size rose to $38.3 million last year from $21.3 million in 2011.
Home HQ North Shore in Artarmon is being offered for sale by the unlisted Direct Retail Fund, which is run by Charter Hall. The centre is valued at about $90 million in the article.
The article notes speculation that Federation Centres, Charter Hall Retail REIT and CFS Retail are considering transactions as they raise capital for new developments. Charter Hall Retail REIT also reported a first‑half net profit of $45.9 million, while CFS Retail and Federation Centres were due to report half‑year results after a year of bedding down new projects and a shift in focus.
According to Jones Lang LaSalle’s Australian head of retail investments, private investors are taking advantage of the opportunity to acquire high‑quality bulky goods assets at attractive yields with a wide spread to debt costs — in other words, investors are targeting assets that offer decent income relative to borrowing costs.
The article says the bulky goods retail market had been through a period of subdued demand from retailers but the outlook is improving. Jones Lang LaSalle suggests a potential recovery over the short to medium term, and notes some signals that lower interest rates could stimulate activity in residential construction and retail, which would help the sector.
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