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Australia’s largest Homemaker Centre comes to market as household goods retailing on the cusp of recovery and bulky goods sector moves to yield compression cycle
ADELAIDE, 30 MAY 2011 – Property developer, Axiom Properties Limited will sell its 50% interest in the South component of Gepps Cross Homemaker Centre in Adelaide, through an Expression of Interest campaign being run by Jones Lang LaSalle.
After Project Managing the North and South components (29,000 sqm and 33,000 sqm respectively) of the 62,000 square metre bulky goods retail centre in Adelaide’s Northern suburbs, Axiom will now sell its stake in the South component.
Simon Rooney, James Kaufman and Jamie Guerra of Jones Lang LaSalle have been appointed to sell Axiom’s 50% interest in the South component.
The centre was completed in 2009 as a combined development (North & South) and houses Australia’s premier bulky goods retailers, including Harvey Norman, Super Amart, The Good Guys, Spotlight, Toys R Us, JB Hi-Fi, Harris Scarfe, Rebel Sport, Mountain Design, Beacon Lighting and Howards Storage. 53 retailers are housed at the site, which is 100% leased.
Jones Lang LaSalle’s Australian Head of Retail Investments, Simon Rooney said, “This is a unique opportunity to acquire a strategic interest in a prime, dominant and strong performing metropolitan Homemaker Centre, strategically located in Adelaide's northern suburbs population growth corridor.
“Counter cyclical buying opportunities currently exist in the bulky goods retailing sector for private investors and opportunistic funds as institutional players exit the market.
“In June last year, Charter Hall sold its 50% interest in the South side of the Gepps Cross Homemaker Centre for $34.8 million to a South Australian private investor. Now an opportunity exists for the remaining 50% interest in the South side to be purchased from Axiom,” said Mr Rooney.
The North side of the Centre is 50% owned by Harvey Norman and in October last year, Gerry Harvey purchased the other 50% stake in the North side from Axiom for $31.8 million at a passing yield of 8.22%.
Mr Rooney said, “The highly cyclical nature of bulky good retailing meant that yields in the sector were hit hard during the GFC. Yields have now been stable for more than a year and now appear very attractive, with a recovery in household goods retailing starting to emerge on the back of recovering housing construction and the strong AUD. We expect further yield tightening for prime centres over the next few years, making it an opportune time to purchase quality assets.
“Rents are line with the market so we see good income growth prospects as the market recovery strengthens,” Mr Rooney said.
A fully leased net income for the 50% interest in the ‘South’ component of Gepps Cross Homemaker Centre that is currently for sale is estimated at $3,194,500 per annum (as at 1 August, 2011)
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