Selling requires discipline

May 3, 2017

The start of 2017 has seen Sentinel complete the sale of the Hunter Supa Centre retail homemaker centre at Rutherford in NSW for $42.25 million, a property we acquired in May 2013 for $18.5 million.

The Sentinel Rutherford Homemaker Trust produced a total Internal Rate of Return of approximately 47.05%.  Investors received $2.62 for every $1 invested when taking into account the capital return from this sale, two previous capital return payments and the monthly distributions over the lifecycle of the Trust.

When we bought properties such as Hunter Supa Centre in regional locations like Rutherford there were plenty of doubters in the wider property investment community. But, with the support of our investors, we were able to buy well in what were unloved sectors at the time that are now strongly back in favour.

To capitalise on the growing market demand for well-leased well-located retail properties, we have also recently placed a portfolio of three Coles-anchored neighbourhood shopping centres in regional NSW on the market.

Half of Sentinel’s responsibility to its investors is to buy at the right time and the other half is to sell at the right time. To do this requires discipline as it is easy to hold on to investments when they are performing well. But successful investment means taking money off the table when the opportunities arise. Just like shares, the best time to sell is usually when you don’t want to.

The retail property market in particular has turned and while I won’t say we are at the top of the market, we must be getting close if the big funds are buying up. Sentinel is remaining disciplined in this rising market to recognise the opportunities to maximise returns for our investors.

There is now a growing weight of money chasing assets in the retail sector and we have plenty of stock as we were buying when others were not. Our regional assets in places such as North Queensland and Port Hedland in WA are also well positioned to benefit from improving commodities and tourism markets and major infrastructure projects.