Stirling Raising Capital for Junction Mall Acquisition

13 February 2020

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.