Record-breaking sale: Emu Park deal reveals 'investor appetite'
THE sale of Emu Park Village shopping centre has set a record producing the highest ever commercial yield in Queensland for a regional IGA-anchored centre.
According to the Real Commercial website, yield is calculated by dividing the annual rental income on a property by how much it cost to buy.
Alex Cowley, communications coordinator for the CBRE Group, the world's largest commercial real estate services and investment firm, said when Kerching Capital recently sold the Emu Park
Village shopping centre for $12.2 million, the deal set a record yield for regional IGA-anchored centres at 6.91%.
"Emu Park Village shopping centre, constructed in 2011 and anchored by a SUPA IGA, was purchased by a private Brisbane investor,” Mr Cowley said.
He said it was good news for our region because it shows there is an appetite for this asset class amongst investors.
Real Commercial points out yield, along with business confidence and occupancy rates, is one of the top three drivers of the commercial real estate market and these drivers are affected by consumer confidence, politics and the economy.
CBRE's Michael Hedger and Joe Tynan, in conjunction with Burgess Rawson's Darren Beehag and Glenn Conridge, negotiated the transaction on behalf of Kerching Capital.
According to CBRE, the 2795sq m centre accommodates numerous strong trading tenants in addition to the SUPA IGA (Drake's Supermarket), including Star Pharmacy and Degani's Café and comprises 63 car parking spaces.
Mr Hedger said the opportunity was a strong investment proposition to a cross section of local and interstate groups, which subsequently prompted seven offers at the close of the expressions of interest campaign.
"We are noticing new lines of capital coming into the market, as well as groups that are taking a longer-term view with their investments and are willing to pay a premium for quality retail centres,” Mr Hedger said.
"The flight to quality, secure and high growth retail investments is evident with further yield compression continuing to be realised throughout 2017.
"We are noticing this yield compression mostly in regional areas, as investors are prepared to move up the risk curve in search of yield.”
Mr Beehag said investors were attracted to the property's strong main trading area and the SUPA IGA offering.
"Investors are increasingly seeking out SUPA IGA-anchored centres because of the fixed annual rent reviews and annuity-style income streams,” Mr Beehag said.
"Additionally, Emu Park Village offers ... attractive depreciation benefits and strong projected sales growth.”
Talking about the sale of the property Kerching Capital director Lloyd Edmunds said CBRE and Burgess Rawson assisted them to achieve their investment objectives earlier than planned with this particular asset, and they were happy to exit the investment on the back of some solid yield compression in regional Queensland.
"By divesting Emu Park Village, we can continue to focus on expanding our portfolio and generate strong returns for our investors,” Mr Edmunds said.