$100 Million Of Retail Property Sales

Bayleys has sold five substantial retail properties to a mix of New Zealand and Singaporean investors at a total value of close to $100 million.

Two of the sales, totalling $66.45 million, which settled during COVID-19 Level 4 and 3 lockdown, were of Auckland suburban shopping centres both anchored by Countdown supermarkets.

The largest of these was the Kelston Mall, which was sold on behalf of PMG Funds for $43.4 million at a 5.86% yield by Bayleys Auckland brokers Ryan Johnson, Sunil Bhana, Cameron Melhuish and James Hill. It was purchased by a private investor who attended a Bayleys Knight Frank Investment New Zealand seminar in Singapore.

Located on 2.1ha at 16 West Coast Road, Glen Eden, the 7741sqm centre has 98% occupancy, with 23 tenants and a Weighted Average Lease Expiry (WALE) of 5.7 years. Originally constructed in 1977 and expanded in 1997, it underwent further development last year including the construction of a purpose-built childcare centre and refurbishment of the internal mall area.

Ryan Johnson, Bayleys’ national director commercial, says while some parts of the retail property market have taken a hit from the impact of COVID-19, other subsectors with occupants such as grocery businesses, supermarket-anchored neighbourhood shopping centres and pharmacies are continuing to attract a good level of investor enquiry.

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“Buyers are distinguishing between discretionary and non-discretionary retail business tenancies. Kelston Mall has a good mix of the latter with other major tenants in addition to Countdown including a pharmacy and medical centre, a childcare centre and Mobil service station. It also has a McDonalds restaurant.”

The other neigbourhood shopping mall transaction involved the Meadowlands Shopping Plaza, at 112 Whitford Road, Sommerville in Howick which settled earlier this week. It was sold to a private New Zealand investor for $23.05 million at a 5.72% yield through Melhuish, Johnson and James Chan. Located on a 1.886ha site with 5215sqm of retail space and 303 car parks, it was built in 1993 with a major renovation undertaken in 2011.

It has a 96.85% occupancy and a 5.2 year WALE, with its current lease to anchor tenant Countdown running until 2026. Melhuish says the supermarket (previously Woolworths) is among a number of founding tenants still in occupation, which also include Unichem and AA, with 12 tenancies having renewed their leases since 2018.

He says an added attraction was the under-utilised site’s Local Centre zoning which provides future development options, allowing for buildings up to four storeys with residential on upper floors.

Featured in Bayleys’ Total Property and Investment New Zealand portfolio, promoted in Asia late last year, the property attracted over 100 enquires from domestic and offshore parties, with six expressions of interest submitted.

Johnson says the Singaporean purchaser of the Kelston Mall was the under bidder on Meadowlands. “They were still keen to secure a similar type of property within 30 kms of Auckland’s CBD. We provided several other options but Kelston was the one that best met their requirements and this sale was negotiated in an off-market transaction.”

Also selling to a Singapore based investor for $13.2 million at a 6.5% yield were two retail offerings in the Auckland CBD’s Wynyard Quarter developed and owned by Willis Bond & Co and marketed by Chris Beasleigh, Bayleys’ national director for retail sales and leasing, and Johnson. Both were multi-tenanted, unit titled commercial premises on the ground floor of new luxury apartment buildings in the mixed use waterfront precinct.

“The buyer was an existing contact on Bayleys’ South East Asian client database attracted by the quality of development in the Wynyard Quarter and who foresees it becoming an increasingly sought after location as the CBD continues to expand along the western waterfront area,” says Johnson.

The premises comprised 10 commercial units totalling 773sqm in the cedar-clad Pavilions residential complex with frontage to Daldy and Pakenham Streets, fully leased to a mix of food and beverage and service businesses, and five retail and hospitality units totaling 493 sq m in a seven-level apartment building with 113 luxury residences at 132 Halsey Street.

Another Countdown anchored property in Tauranga marketed by Peter Gorton and Mike Houlker of Bayleys Auckland and Mark Walton, Bayleys Tauranga has also sold for $20 million at a 6.2% yield. The sale to Siverfin Capital was settled last month.

Located on a 5767 sq m site in the Fraser Cove shopping centre, the 5977sqm retail premises are predominantly occupied by a Countdown supermarket on a lease until 2028 with other smaller tenancies. Silverfin’s syndication of the property encompassing 299 interests of $50,000 has been fully subscribed.

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