A multi-billion dollar publicly listed company announced on Thursday that it had acquired Wagga’s Sturt Mall for $73 million.
The SCA Property Group already owns a total of 77 neighbourhood and sub-regional shopping centres all around Australia.
The Sturt Mall is just the most recent addition to the company’s already impressive property portfolio, which was most recently valued at $2.44 billion at the end of last year.
SCA Property Group CEO Anthony Mellowes said the company is already well established in regional NSW and owns two shopping centres nearby in Griffith.
“This is our first Wagga property, but we own properties all through regional NSW – Katoomba, Orange, Dubbo, Lismore, Tamworth – we really like strong regional towns,” Mr Mellowes said.
“The Sturt Mall is a very strong centre, it has a very good Coles and a very good Kmart, and Wagga has very strong fundamentals, so we’re really pleased to be investing there.”
The Sturt Mall was previously owned by Dexus, another national property group with a portfolio of industrial, retail, and office properties with a combined value of $26.5 billion.
Mr Mellows said the Sturt Mall was one of the bigger properties the company had invested in.
“This will be in our top 10 in size – we own or manage about 80 shopping centres, and most of them are just a Woolworths or a Coles with a few shops, but we do have about seven or eight larger centres like this,” he said.
“We know the owners of the Marketplace next door have spent a bit of money there and have more of the fashion-type tenants, but we’re looking to have more of your everyday spend shops – we like things like medical and fresh food.”
The shopping centre is expected to yield an annual profit of 6.3 per cent for its new owners, which equates to almost $4.6 million.
Wagga property valuer Christopher Egan said the projected yield was a bit lower than it would have been a couple of years ago, but that was actually a good sign for the investors.
“Yes, these ASX listed companies are buying a building, but they’re intrinsically buying an income stream linked to the lease tenure,” Mr Egan said.
“The theory behind it is the lower the yield, the less the perceived risk, so because the Sturt Mall has Coles and Kmart as its supermarket anchors, it can sell on a much tighter yield because the lease tenure is considered very low-risk.”
Mr Egan said these factors combined made the Sturt Mall an obvious choice for any out-of-town investor.
“In addition to the anchors, it’s got the specialty stores and the car park, so it’s a really attrractive site, the occupancy rate would be 95 per cent, and it’s got a proven track record in the largest inland city in NSW,” he said.
More information is expected to become public next Tuesday, when the SCA Property Group is due to announce its yearly results.
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