Adelaide convenience-based retail asset sells off-market for $85m

ADELAIDE, 11 July 2023 – A 100% interest in a convenience-based sub-regional retail centre in Adelaide has sold for $85 million to FRP Capital.

JLL’s Nick Willis and Sam Hatcher exclusively sold Brickworks Marketplace on behalf of Charter Hall after tabling an unsolicited offer from FRP Capital that represented a 5.43% yield and a capital value rate of $4,953/sqm, a signal of the depth of investor appetite for convenience-based retail assets which have been rarely offered in 2023.

Situated on 4.44 hectares of land at the northwest corner of Aswin Parade and South Roads, Brickworks marketplace offers 17,300 sqm of Net-Lettable Area. Anchored by Woolworths, Big W and Dan Murphy’s, the centre is supported by Direct Chemist Outlet and 40 specialty stores in addition to 680 car parks. The asset boasts 96% occupancy and a Weighted Average Lease Expiry (WALE) of 9.3 years. Completed in 2015, Brickworks Marketplace is located within Torrensville, 4.9km northwest of Adelaide CBD.

Brickworks is now the seventh sub-regional asset to have transacted in half one of 2023, representing 32% of total retail transactions*, up 21% from the year prior. Sub-regional centres are seeing an increase of capital favoured towards the sub-sector due to their strong investment thematic, and for Brickworks in particular, the long WALE outlining security in the income. 

Charter Hall Retail CEO Ben Ellis stated: “This sale is a strong outcome for CQR and its wholesale partner Telstra Super. Our partnership with Telstra Super has been long and successful with RP1 delivering a 12% equity IRR since inception of the partnership in 2011. The sale was the result of an unsolicited offer and demonstrates the underlying quality and the strong demand for CQR’s Convenience Plus retail assets. It also demonstrates Charter Hall’s on-going focus on curating our portfolios to recycle capital and invest for the benefit of unitholders.”

Mr Willis said, “South Australia is a tightly held market, historically dominated by long term generational family holders, assets in such proximity to the CBD and on large land holdings like Brickworks are rarely traded, in any capital city. We continue to experience a strong resurgence from capital towards the sub-regional sector, with transacted volumes over 40% above the 5 year average for the first half of 2023. Capital is attracted to the relative return spread this sub-sector is providing, in addition to the robust performance and value add potential.”

Consistent with FRP Capital’s acquisition and investment strategy; the centre's strong WALE, non-discretionary tenant mix and growing catchment area made the Brickworks Marketplace an attractive investment opportunity.

Benjamin Fusco, one of FRP Capital’s directors, said “Flagship centres on significant land holdings, within a 5km radius of capital cities, do not come up very often (if at all). We are delighted to have secured this rare and high-quality asset, which further strengthens our growing portfolio and brings our funds under management to over $250M with commercial property assets in South Australia, Western Australia & New South Wales.

“We look forward to managing the centre and implementing additional value add opportunities, through strategic leasing and tenant remixing and potential development of the site.”

Mr Hatcher said, “We are continuing to see increased levels of activity and capital focused on the sub-regional sector given the assets’ relative returns and large land holdings providing future mixed-use potential. This transaction reflects the confidence in the South Australian economy and property market, both of which have performed strongly through the challenges of COVID-19.”

Brickworks Marketplace sits adjacent to a nine-hectare site which the Adelaide Crows have proposed as their new headquarters as part of the Thebarton Oval Precinct Masterplan.

Adelaide’s burgeoning development pipeline continues to grow as South Australia emerges as an attractive alternative to the Covid-hit eastern states for developers. At the close of 2023, $1.5bn in additional projects is projected to be underway across the city and in the regions.

^{*Only retails sales over AUD 10 million}