Stirling Property Funds have exchanged contracts to acquire the Junction Fair shopping centre at 204 Union Street, The Junction (near Newcastle) NSW for $46.7M.
The neighbourhood shopping centre was constructed in 1986 on a 11,250 sqm site with 7,226 sqm of net lettable area. The centre is anchored by a Coles supermarket (leased to 2027), two mini-majors, 21 specialty tenancies, 1 kiosk, 2 ATMs with space for 231 vehicles.
The purchase price equates to $6,504/sqm of NLA and reflects a passing yield of 6.9% based on the net passing income of $3.3m.
The vendor, Fortius Funds Management, acquired the shopping centre for $32 million in 2014 and undertook some further improvements before marketing it for sale in March 2019. As at November 2019, the Centre recorded Moving Annual Turnover (MAT) of $61.8M, which was down 3.1% due to the opening of nearby Harris Farm.
The Weighted Average Lease expiry (WALE) across the centre is 4.8 years with the weighted average annual rent review for non-Coles tenants at 3.5%.
Stirling are seeking to raise $27.8M in an unlisted Fund to complete the acquisition and is targeting initial net cash distributions of 7.7% p.a., increasing to 8.8% in year six, with average distributions of 8.0% p.a.
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