News and Media

Fortius divesting Newcastle shopping centre

Friday, March 15, 2019

FORTIUS Funds Management has put the Junction Fair shopping centre in Newcastle to market, following an extensive repositioning strategy since acquiring the asset late in 2014.

CBRE’s Nick Willis and Philip Gartland of Stonebridge are marketing the asset via expressions of interest closing April 11.

Located at the intersection of affluent Newcastle suburbs The Junction, Cooks Hill, Merewether and Bar Beach, the 7,226 sqm neighbourhood shopping complex is on an 11,250 sqm site and is anchored by a strong performing Coles supermarket that occupies 65% of the centre.

The centre includes two destination mini-majors that are complemented by 22 specialty retailers, and provides a net annual income return of around $3.2 million.

Fortius Funds Management acquired the property more than four years ago for $32 million from the AMP Property for Income Fund, at a 6.7% passing yield at a time when the asset was 24% vacant by income.

“Several years back we undertook a rigorous process to understand our customer and consumer,” Fortius’ Sam Sproats said.

“The centre is in a great location in a constantly improving demography and surrounded by three schools. We have spent considerable time ‘rolling the sleeves up’ and ensuring we got the strategy and detail right for this shopping centre.

“In some cases, we handpicked the desired retailers to create a real village style retail and community experience, which the affluent locals can rightly be proud of.”

Willis said the sale campaign coincided with growing investment interest in the neighbourhood shopping centre market, with a shift in investor demand to non-discretionary based retail assets that provide a defensive income stream.

CBRE research showed neighbourhood shopping centre supply has been constrained, down 63% in 2018.

“The robust performance of non-discretionary retail centres, particularly those with destination/experiential offers like Junction Fair, remain in strong demand.”

The Essential Ingredient’s cooking school was introduced as a tenant as part of Fortius’s repositioning.

Newcastle is benefiting from significant government and private infrastructure spending, with major projects including the new $310 million light rail, the Hunter Street Mall redevelopment that will see over 4,000 new dwellings over the next 17 years, and the proposed expansion of its airport.

Australian Property Journal