Queensland sale highlights investor demand for well-established LFR assets

Arcana Capital has acquired a prominent large format retail (LFR) centre in Queensland’s Mackay region for $12.3 million.

CBRE’s Joe Tynan, Michael Hedger and Harrison Coburn negotiated the sale of the Mount Pleasant property on behalf of a high-net-worth (HNW) group of private, Melbourne-based investors.

Mr Tynan said the formal, on market Expressions of Interest campaign had attracted a significant number of enquiries from HNW private investors and syndicators, resulting in five formal offers.

“The sale demonstrates the continued buyer depth for well-established, freestanding LFR assets which are underpinned by strong national covenants and provide income security and management benefits,” Mr Tynan said.

The 17 Greenfields Boulevard centre has a gross lettable area of circa 6,241sqm and is fully leased to national chain retailers, including Clark Rubber, Beds R Us, Silly Solly’s, Betta Home Living and Intersport.

It is located approximately 3km north of the Mackay CBD on an expansive 2.18ha site within the Mount Pleasant retail hub.

The centre has been acquired for Arcana Capital’s 17 Greenfields Blvd Mackay Unit Trust, which has been fully subscribed.

Arcana Capital chairman Campbell Newman noted, “This is an exciting acquisition that satisfies the essential property fundamentals for wholesale investors: a high-quality property in a strong economic area, with long leases to strong tenants, paying a very competitive monthly distribution to investors forecast at 8% per annum. We received significant interest from investors and were able to successfully raise capital in a difficult economic environment.”

There have been limited LFR transactions in Queensland in 2023, with just $99 million in sales year-to-date and expectations that the final volume of sales will be the lowest since 2011.

This is despite the sector’s sound fundamentals and comes as high construction costs crimp new supply.

CBRE Research Director Tom Broderick said, “In the decade prior to the pandemic and subsequent construction cost inflation, there was an average of 96,000sqm of LFR construction per year in Queensland. Since 2020 we have been averaging less than half that, at 37,000sqm per year, with this lack of supply likely to lead to above trend rental growth.”