Acquisition Date: June 2020
Acquisition Price: $46.65 million (Effective acquisition price for Class A Unitholders – $44.3 million)
Target IRR: 15.7% p.a. including 9.1% p.a. average cash distribution
Offer closed oversubscribed during the Covid-19 pandemic
Junction Fair Shopping Centre is a dominant non-discretionary neighborhood center, anchored by Coles supermarket with 21 specialty retailers located in The Junction, 1.5 kms south of the Newcastle CBD and adjacent to the affluent suburb of Merewether. The catchment features median income and population growth 18% and 14% higher respectively than metro Sydney.
Stirling employed a top down strategy in identifying the asset with Junction Fair meeting all four key criteria: 50%+ of income from a major supermarket, 75%+ of lettable area non-discretionary, high socioeconomic demographic and in an area with government infrastructure investment
The fund is outperforming forecast including a current distribution of 9.75% p.a. against original forecast of 9.1% p.a. Annual sales turnover is up 10% from CY19 to CY20 allowing for a 4% increase in new rents over prior rental levels.
Stirling is underway with a specific asset strategy to unlock lettable area to accommodate further service based tenancies that meet the needs of the wealthy catchment whilst restructuring the Coles lease to potentially deliver a target total return exceeding 15.7% p.a.