Continuing a strong run of retail transactions in Queensland, the Benowa Gardens shopping centre, located on the Gold Coast, has sold for $60.5 million, reflecting a passing yield of 4.99%.
Benowa Gardens is a Coles anchored enclosed neighbourhood mall, with 37 specialty tenancies and a freestanding KFC drive-through restaurant. The centre features a total GFA of 5,856m2 and parking for 384 cars, on a site of 17,660m2. Benowa is an established residential suburb of the Gold Coast, located four kilometres west of Surfers Paradise.
Savills’ Peter Tyson transacted the deal on behalf of Brisbane-based fund manager, IJ Capital, to a local private investment group after less than two years of ownership, crystalising a strong uplift in value.
IJ Capital acquired the centre in early 2020 for $40.1 million in a transaction also managed by Savills.
Led by Scott Lai, IJ Capital targets investment into assets with strong return metrics above market levels or clear value-add opportunities. Lai commented: “IJ Capital’s focus is identifying market-beating returns for our investors, including significant capital growth”.
“We recognised value-add opportunities with Benowa Gardens, consistent with the ‘core-plus’ investment objectives of the Fund. We immediately undertook an active management strategy including centre upgrade works and a focused leasing plan successfully addressing numerous vacancies.”
Tyson added “After stabilising the centre and significantly improving the income stream, the centre was briefly marketed in December 2021 and attracted multiple offers, resulting in a deal reflecting a capital uplift of over 50% in less than two years.”
“Convenience based neighbourhood centres as an asset class remain incredibly popular in the market, attracting a wide range of capital sources. Income streams underwritten by staple everyday needs, predominately food and services, have proven resilience and are less prone to fluctuation from outside influences. The pandemic effects, social distancing restrictions and work from home, have bolstered performance in the smaller malls,” said Tyson.
“This underlying performance continues to drive an enormous weight of domestic and off-shore capital, both private and institutional, to target the asset class. Transactions on smaller malls tend to be dominated by the nimble private investor fraternity and is likely to remain the case as yields continue to compress in response to the weight of capital.”