Regional Retail Investment Spree Heats Up

The Urban Developer | Phil Bartsch

A central Queensland mining town shopping complex has changed hands in a $28-million deal as investor focus increasingly sharpens on Australia’s regional retail assets.

Brisbane fund manager Sentinel Property Group has swooped on the Moranbah Fair Shopping Centre, staying the course of its regional investment strategy.

The purchase from Sydney-based Elanor Investors Group was struck on a high yield of 8.47 per cent.

Moranbah Fair Shopping Centre is a key piece of social infrastructure and amenity for Moranbah—150km south-west of Mackay—and its surrounding rural and coal mining region.

Anchored by a full-line Coles supermarket, it has been acquired as part of the Sentinel Diversified Investment Trust, which includes the commercial complex The Hub, Greenfields in Mackay.

Sentinel’s other retail assets in the area include The Village, Emerald and The Plaza, Emerald, which it purchased for $18.3 million and $14.7 million, respectively, in 2014.

“We’ve now got $540 million invested north from Mackay, including Townsville, Cairns and Darwin—retail and everything else,” Sentinel executive chairman Warren Ebert said.

“We got in early in New South Wales, Victoria and Queensland the best part of a decade ago when nobody else was buying after the GFC.

“Now, there’s certainly a greater demand and we’re back to where we were in 2006-2007, new people are entering the market and overpaying for properties, buying assets sight unseen and it will end in tears.

“With the weight of capital around, there’s a lot of cash out there waiting to be deployed and investors are chasing the regional assets because they’re higher yielding compared to assets closer to the cities and there’s a lot of activity in the regional areas.

“Also, there haven’t been very many lockdowns in the regional areas, you’re seeing a whole lot more people travelling in the regional areas.

“And some of the stuff that’s happening in the regions is just mind-blowing—multi-billion-dollar projects that are employing hundreds or thousands of people.

“That whole Bowen Basin is just absolutely booming. We’ve got 21 properties in Mackay, so we’ve got a pretty good handle on what’s happening in that area … it went through some tougher times out there but the market has certainly turned.”

Moranbah Fair Shopping Centre spans 7058sq m, including a freestanding KFC site, and 16 specialty shops.

Coles—the only full-line supermarket within 160km of the town—has a 15-year lease expiring in 2028, with two five-year options. National tenants represent more than 70 per cent of its gross passing income with a strong weighted lease expiry by income of five years and a low vacancy rate of 2.6 per cent.

Ebert said Moranbah was a strong performing regional centre with a growing economy associated with essential commodities particularly mining and agriculture.

“The gross regional product has increased by approximately 120 per cent since 2015, compared to 13 per cent for Queensland and 10 per cent for Australia over the same period,” he said.

“The Isaac Region is underpinned by about 24 operational mines, producing 42 per cent of Queensland’s saleable coal.

“The recently approved $1-billion Olives Down coal mine project is approximately 40km south of Moranbah and will create more than 1500 local jobs, generating more than $8 billion to the local economy and more than $10 billion to Queensland’s economy.”

Established in 2010, Sentinel has a national portfolio of more than 55 retail, industrial, office, land, tourism infrastructure and agribusiness assets with a total value in excess of $1.2 billion.