In the first major retail transaction of 2021, Invesco has sold Sydney’s Forestway Shopping Centre. The Shopping Centre was sold for $100 million to local Paramatta-based investor, Revelop.
JLL’s Nick Willis and Sam Hatcher brokered the off-market transaction for a yield that was recorded at 5.37%.
Invesco acquired the shopping centre in 2015. Forestway is in Frenchs Forest, about 13 kilometres north of Sydney city. Developed in 1966, Forestway contains 9,600m2 of area and is anchored by two supermarkets – ALDI and Woolworths – and a McDonald’s. There are also 37 specialty stores and two pad sites.
“Growing demand for defensive neighbourhood retail from a range of private and institutional capital sources, both domestically and offshore, is driving more competitive pricing and yield compression,” said Nick Willis. “The wide yield spread relative to prime CBD office and industrial is attractive to a range of investors, on a relative basis, given the consistency and reliability of income.”
“Private investor and syndicator capital represented over 40% of all purchases in the past 12 months, with increased confidence in the market they are now moving up into a new price cohort and now seeking larger scale deals,” said Willis.
“In the past 12 months, we have completed over $700 million worth of Sydney metropolitan shopping centre transactions, and with the reopening of markets, we are experiencing increased demand for other major metropolitan markets.”
Hatcher said: “New capital sources are emerging to absorb some of the institutionally owned assets, driven by the opportunistic timing, the attractive yields relative to core real estate in other asset classes and the longer-term potential for re-development.
“However, a key constraint will be the continued inability to travel for property inspections from offshore and the lack of clarity on income reversions and rent collections. These two factors are encouraging and cementing more joint venture partnerships and passive (indirect) investments by offshore investors with local specialist managers, a trend which we expect to continue,” added Hatcher.
Owning Forestway makes Revelop the precinct’s biggest private landowner. The acquisition came a week after The Manly Daily reported Northern Beaches Council rejected a $114 million redevelopment proposal that Invesco put forward two years ago.
Under that plan, a portion of the two-hectare block would have been cleared for a multi-level complex with office, retail, a childcare centre, medical complex, gym and rooftop park. Council said Invesco’s application was not in the public interest, specifying it would add traffic, undermine the area’s character and be contrary to community expectation.