- Investors will have the opportunity to acquire the 143,520 sqm freehold offering across four separate titles
- Comes with a 5.1 year WALE by income
- Centre was originally built in 2000, with a $3M foods and beverage precinct recently completed
A 100% interest in the Crossroads Centre, one of the most substantial large Format Retail assets in Australia, is being offered to the market.
Investors will have the opportunity to acquire the 143,520 sqm freehold offering across four separate titles. The centre has a gross lettable area of 52,138 sqm, making it one of only five other centres in Australia under single ownership this size.
Only four such assets have sold for above $150 million since January 2010.
Sam Hatcher and Nick Willis of JLL Retail Investments Team along with Philip Gartland, Carl Molony and Joanthon Fox of Stonebridge have been appointed to sell the asset on behalf of AsheMorgan.
Mr Willis said Crossroads has flexibility that is unmatched in terms of how it can produce income.
“A hub for retail, logistics, office and accommodation uses surrounds the future of the asset – and presents an opportunity to an incoming purchaser to capitalise on,” said Mr Willis.
“The size of the significant land holding drives the investment underwrite, with a scarcity of land across the Sydney metropolitan area being a major contributor to total investment returns.
“The rarity of Crossroads’ land holding is further bolstered by its ability to be utilised for an array of industrial uses subject to approvals.”
Nick Willis, JLL Retail
Mr Hatcher reiterated that it is one of only five such large retail format assets nationally. It is backed by a heavyweight tenant mix with 99% of gross income anchored by chain and national retailers.
“The 5.1-year WALE (by income) provides a secure platform for growth and repositioning potential – allowing a sizeable portion of income to be underwritten.
“At the same time, under-rented tenancies are unlocked for positive reversions or future repositioning potential.”
The 38 tenants include Bunnings, Officeworks, Fantastic Furniture and Freedom. Co-location tenancies include Costco Wholesales, WesTrac and Crossroads Hotel which recently sold for $160 million.
“Retail and industrial property are becoming increasingly interlinked with demand for high quality, strategically linked land holdings that can accommodate this growing trend continuing to rise,” said Mr Molony.
“The scarcity of such an offering coupled with the strength and versatility of the underlying property fundamentals will appeal to a variety of buyer groups which is rarely available in the market,” added Mr Gartland.
The centre was built in 2000 and recently underwent its latest redevelopment, which was a $3 million food and beverage precinct.
“The scale of Crossroads is rarely replicated or traded within Australia,” said Mr Willis.
“On record, Crossroads is the largest land parcel in the LFR sub-sector to have traded and the second-largest by total GLA. Since January 2010, only four LFR Centres above $150 million have sold.”
Large format retail strong during Covid
Research from JLL has shown that large format retail performed exceptionally well during 2020 and 2021, with yields compressed by 105 bps since the end of 2019. Some recent transaction have reflected yields below 5% for the first time.
“Spending on household goods, the category which drives large format retailer performance, is 23% (or $13 billion p.a.) higher than pre-COVID levels,” said JLL Retail Research Australia’s Senior Director Andrew Quilfeldt.
“The boost in sales growth was initially driven by working from home and lockdown conditions, then propelled by strong residential renovation activity.
“Large format retailers are wanting to grow and expand their businesses as a result of the strong sales growth in this category, but space availability is limited and leading to rental growth pressure.
“Large Format Retail is the only retail property sub-sector to record a decline in vacancy rates since the onset of COVID-19,” he concluded.
