A large sub-regional shopping centre in Rosebud has changed hands as investors target higher returns from non-discretionary retail properties.
Charter Hall Retail REIT said on Friday it has an agreement to acquire the Rosebud Plaza from CFS Retail Property Trust Group (CFX) in a deal valued at $100 million.
The Plaza sold on a year-one yield of 7.8 per cent.
The centre, on Melbourne's Mornington Peninsula, is anchored by Coles and Safeway supermarkets, Kmart, a freestanding Kmart Tyre & Auto, Target and 60 specialty stores.
Simon Rooney, Jones Lang LaSalle's head of retail investments who negotiated the deal, said a growing pool of capital was being allocated to sub-regional centres, trying to capitalise on the attractive yields available.
"Activity in sub-regional centres has been ramping up in the past 12 months. Total sub-regional transactions for 2013 are now in excess of $1.66 billion for 2013 year-to-date, an increase of 69 per cent on 2012," Mr Rooney said.
The Plaza transaction will be funded by a fully underwritten $80 million institutional placement, an $8 million pro-rata placement from the Charter Hall group and a $3.801 per unit offer to retail investors, Charter Hall fund manager Scott Dundas said.
As part of the purchase Charter Hall Retail REIT secured a $50 million increase on its syndicated debt facility at existing prices enabling it to increase liquidity by $30 million, he said.
Michael Gorman, CFX fund manager, said proceeds of the sale would be used to retire debt and invest in CFX's developments and new acquisitions.
The Plaza had averaged a return to investors of 12.9 per cent since it was first purchased in 1998, he said.
Two other neighbourhood and sub regional centres are currently on the market - the MAB Funds Management-owned Mornington Village centre and Bendigo Marketplace shopping centre.