Large Format Retail Centre in Sydney’s north west changes hands for $66.8 million

Sydney-based investment company Centennial has acquired large format retail (LFR) retail centre, McGraths Hills Home for $66.8 million on a yield of 5.6% from Stirling Property Funds Management. 
 
Only the fourth LFR transaction in metropolitan Sydney in the past five years, the asset features several best-in-class large format retailers including Bunnings Warehouse and Harvey Norman.  
 
The transaction of the property at 10 Industry Road, Vineyard, was exclusively negotiated by CBRE’s Senior National Director, James Douglas.
 
Located in Sydney’s north west, 51km from the CBD and positioned in one of city’s largest and fastest growing residential corridors, McGraths Hill Home occupies a land-rich, high-profile 37,840sqm site along Windsor Road within the McGraths Hill bulky goods and industrial precinct.
 
Mr Douglas noted LFR properties continue to be in high-demand, as investors continue to be attracted to diversified tenant base, with in-built income growth that are predominantly secured by ASX-listed and national brands providing strong lease covenants. 
 
“LFR assets continue to be tightly held and rarely traded, with investors attracted to the strategic landholdings that these centres typically occupy and the potential for future development. LFR assets also offer transparent and reliable cashflows, with strong in-built rental growth and high expense recoveries, providing a sustainable base for income growth,” Mr Douglas said. 
 
“Large Format Retail had posted sector leading investment returns of +12.8% pa over the past 10 yrs, supported by cap rate compression and rising rents. Retailers have gravitated to big box shops to maximise productivity while consumers have benefited from a wider selection of products and convenient parking.  Looking ahead, supply is expected to be ~12% below the past five years which bodes well for rent growth,” Mr Douglas added.
 
The property is supported by a flexible planning scheme, zoned B5 Business Development and Special Purpose (SP2) Infrastructure, allowing a broad range of future developments (STCA).