SCA Property Group's disposal of assets in their SURF1 wholesale fund has found a strong market with a Woolworths in Fairfield Heights selling on a 5.6% yield at $23.8M.
The property consists of freestanding 3,361sqm Woolworths Supermarket with two supporting specialty shops (342sqm) which was developed in 2012. The Woolworths tenancy is secured by a 15 year initial term expiring 2033 with 4 x 10 year options and guaranteed minimum base rent review of 5% every five years. The asset generates an net income of approx $1,338,753 per annum.
The purchaser Tamim Asset Management is predominantly an equities manager with one other property asset at Elermore Vale. Tamim compares the 5.5% return from the real asset to Woolworths Corporate Green Bonds offering 2.75%. The capital characteristics of bonds and property are however quite different and investors should be seek advice in respect to switching.
Tamim Asset Management told the Financial Review that it "expects retail rents to fall 25 per cent" and that "landlords needed to be more innovative and work with their tenants…..to be more community focused and think about the immediate demograhic and how to bring them into the centre".
SCA sold the Woolworths and the other assets in the SURF 1 fund – two Dan Murphy's, a Woolworths in Griffiths and a Big W in Inverell – for a combined $69.3 million, a 13 per cent uplift on what it paid for them. The Fairfield store was traded at its book value.
The Centre was sold by JLL.
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