Charter Hall Retail REIT Offloads ‘Lower Growth’ Assets at Discount

Charter Hall’s ASX-listed Retail REIT has divested two Woolworths-anchored assets for a total $76.1 million, a “small discount” to the assets’ book value.

In its 2018 annual report, the Charter Hall-managed fund reported a book value of $60 million for Coomera Square and $17.8 million for the Young asset – $1.7 million more than the $76.1 million paid for the two assets.

Despite a run of sub-6 per cent yields this year in the regional neighbourhood shopping centre market, the discount on both Woolworths-anchored assets is a sign the market is starting to cool.

Headwinds were expected for the sector in the later quarter of 2018, although centres focused more on food and drink are viewed as more recession-proof.

The fund acquired Coomera Square for $59.2 million in July 2014.

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An unnamed property syndicator picked up the 9,431sq m centre. The 11-year-old Coomera Square is located 20km north of the Gold Coast and has 38 tenants.

The Young Woolworths was sold to a Victorian-based investor. Charter Hall Retail REIT acquired the neighbourhood centre in 2016 as part of its acquisition of Macquarie Group’s core real estate management platform.

Earlier this year, Charter Hall Retail REIT sold a neighbourhood shopping centre in Sydney’s Thornleigh and a Coles-anchored centre in Sydney’s Earlwood at a premium to book value.

Settlement of Coomera Square is forecast to take place in December 2018, while the Young asset is expected to be settled in February 2019.