Downtown Delacombe was sold by Troon Group to SCA Property Group for $ 112 million, reflecting an implied fully leased yield of 5.34%. The off-market sale was negotiated by JLL Senior Director of Retail Investments Stuart Taylor and Deputy Director of Retail Investments Sam Hatcher.
Delacombe is a suburb of Ballarat, Victoria’s third largest city, and is part of the Ballarat West Growth Area. Ballarat is located approximately 100 km northwest of Melbourne.
The asset is a sub-regional convenience shopping center comprising 19,098m2 of floor space, anchored by Woolworths, Kmart, Dan Murphy’s and ShowBiz Cinemas with 35 retail rentals.
Taylor commented: “The sale of downtown Delacombe sets a new benchmark for non-metropolitan sub-regional business assets across Australia.
“The high pricing achieved is a function of increased investor demand for quality convenience store assets given their relative value and resilience in recent times, coupled with a limited supply of opportunities in this asset class. “Taylor said.
“The asset that was developed by Troon Group in 2017 offers a genuine local retail offering, with Woolworths and Kmart performing well above industry benchmarks. The growth achieved by this asset also underlines that assets located in the regions have a real potential for outperformance, ”he added.
Delacombe is a rapidly growing part of one of Victoria’s major regional cities and is expected to double in size over the next 20 years. The city center of Delacombe occupies a 6.5 hectare site within the area of the development plan of the western wall of Ballarat (PSP). This is a growth area of 1,290 ha, of which approximately 920 ha of net developable area has been allocated to residential uses. At full capacity, this will translate to over 14,000 homes in the PSP area, with an estimated population of over 36,000.
Hatcher commented: “We are experiencing a growing demand for quality sub-regional assets from a range of private and institutional sources of capital, both domestic and offshore, resulting in more competitive prices and squeezing yields. “.
“There was a total of around $ 1.6 billion in sub-regional center transactions in 2021 YTD, compared to just $ 687 million in 2020,” he said.
Taylor concluded that “private investors and unions have been the dominant buyers in the sub-regional sector this year, but institutional investors’ appetite is returning for the best assets – a trend we expect to continue in 2022”