The retail end of the commercial property sector is buzzing with news of the first big deal in 12 months, with Colonial First State Retail Property Trust offloading a shopping centre in the northern suburbs of Adelaide for $100 million.
A private investor – believed to have interests associated with the Adelaide-based Fitch family – swooped on the Golden Grove Village shopping centre, which is about 20 kilometres north of Adelaide.
CFS says it is happy with the price negotiated. The centre had a book value of $73 million when the trust took it over in October 2002, although CFS was forced to revise the assets value down from $118.4 million last December as a result of the property downturn.
The deal was brokered on an initial yield of 7.5%.CFS will use the funds to retire debt.
CFS fund manager Michael Gorman said in a statement that he was pleased with the deal.
“The sale allows us to realise the value we have added to the centre since acquisition and further increases the trust’s balance sheet flexibility.”
The news will be something of a fillip for Australia’s struggling commercial property sector, which is buckling under high debt and increasing pressure from lenders.
It has recently emerged that banks have been in negotiations with the Federal Government to arrange a special funding vehicle to prop up the commercial property sector over the coming months.
The banks are concerned that many property owners will be forced to dump their assets at fire-sale prices if they are unable to secure fresh funding.
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- Government considers commercial property loan bailout
- Commercial property sales plummet as credit market squeeze hits
- Residential property starts recovery, but commercial outlook cloudy
- Commercial property feels the squeeze
