A Melbourne property syndicate has bought Corio Central shopping centre in a $101 million deal.
IP Generation has emerged as the buyer of the 31,052sq m northern Geelong complex anchored by Kmart, Coles and Woolworths.
The $101 million price tag was a 3.8 per cent discount on the book value set by listed retail property firm Vicinity Centres, which has been selling non-core assets to fund expansions to centres in Melbourne’s east.
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Vicinity also offloaded Belmont Village for $58 million.
The anchor tenants take up 44 per cent of the Bacchus Marsh Rd centre’s floorspace, with major, chain and national retailers providing 87 per cent of the gross lettable area.
The centre attracts a main trade retail expenditure of $711 million, which is expected to reach $929 million by 2028, with food accounting for 60 per cent of spending. The centre generated a net income of $9.4 million in the 2019 financial year.
CBRE head of retail capital markets Simon Rooney negotiated the deal, which is expected to settle mid to late December.
IP Generation is a property-based syndicate which has completed over $250 million of property transactions in the past 12 months.
Chris Lock is a director of the business, which also acquired the former Quiksilver headquarters at Torquay in a $15.2 million deal in 2018.
Through a related company, IP Generation Torquay, the business has sought planning permission to embark on a $13 million development, including a cinema, microbrewery and wellbeing centre.
Corio Central is the latest in a string of major retail assets, including shopping centres and standalone supermarkets, that have been traded in the region in the past two years, with the total value estimated at more than $500 million.
Three were valued more than $100 million centres including Leopold’s Gateway Plaza ($117 million), a half-share of Waurn Ponds Shopping Centre, and Corio Central.
Mr Rooney said the sale of Corio Central came amid clear signs of more positive investment sentiment around retail assets despite a fall in retail transaction volumes in 2019.
“Better quality assets with an obvious growth and value-add profile represent an attractive value proposition compared to other sectors,” Mr Rooney said.
“An increasing number of these strategic retail assets that have traditionally been long-term institutional holds are now presenting themselves.
“Investors are targeting sub-regional centres like Corio Central, which have a strong non-discretionary tenant mix and provide a solid convenience centre offering,” he said.
“In this instance, interest was underpinned by the significant investment occurring in Geelong, boosted by the recently announced Geelong City Deal — a 10-year partnership between the Federal and State government, which will provide the city with a $1.1 billion economic boost.”