Newcastle's Junction Fair Shopping Centre has been sold to Stirling Property Funds for $47 million, making a tidy $15 million profit for Sydney funds manager Fortius, which purchased the centre six years ago for $32 million.

Junction Fair is a non-discretionary-focused neighbourhood shopping centre anchored by a Coles supermarket and located in The Junction, 1.5 kilometres south of the Newcastle CBD, close to Merewether Beach.

The site has 7226 sqm of lettable area, 231 car spaces and sits on 11,250 sq m with four street frontages.

At a glance: 

• Newcastle's Junction Fair Shopping Centre has been sold to Stirling Property Funds in what is the company's third acquisition.
• The site has 7226 sqm of lettable area, 231 car spaces and sits on 11,250 sq m with four street frontages.
• The centre was purchased for $32 million by Fortius six years ago.
• The deal was brokered by Stonebridge Property Group’s Philip Gartland, in conjunction with JLL’s Nick Willis.

The centre's non-discretionary and service-based tenants account for 77 per cent of its lettable area.

Coles provides 50 per cent of the property's income and its lease runs until 2027 with two 10-year options. 

Fortius Chief Executive Sam Sproats said he was pleased with the investment outcome, having negotiated the contract with Stirling before COVID-19 struck.

“The speed of the pandemic and isolation restrictions had created uncertainty but neighbourhood shopping centres had proven their resilience – footfall and retail sales were returning to normal," he said 

"Inner urban and neighbourhood centres continue to be a key target area and sector whereby Fortius’ skillset can be utilized. We are keenly focused on assets with multiple income streams, underpinning solid cashflow returns and some vacancy to secure commitments.”

The centre marks the third acquisition for Stirling Property Funds, following the purchase of an office/warehouse asset in Macquarie Park for just more than $15 million in 2018 and  203 Northumberland Street, Liverpool, for $47 million last year.

The latest deal was negotiated by Stonebridge Property Group’s Philip Gartland, in conjunction with JLL’s Nick Willis.

Stirling Property Funds Chief Executive Matthew Hyder said Stirling's investment strategy was to acquire quality income-producing assets that demonstrated relative value to other property sectors, particularly in areas with government spending on infrastructure and where there was a growing population.

“Junction Fair had demonstrated its strong non-discretionary nature during COVID-19, with April 2020 sales up 22 per cent year on year and 91 per cent of its tenants keeping their outlets open compared with discretionary weighted shopping centres where just 37 per cent of the tenants stayed open," he said.

“Junction Fair equity raising of $25 million had been oversubscribed and completed in just more than two weeks," he said.

Mr Willis said although the retail sector had evolved in recent times, there was still a significant weight of capital looking to deploy into the sector.

"This capital has largely either identified the resilient nature of neighbourhood shopping centres like Junction Fair and a reweighting towards sub-sector, or the opportunity in typically sub-regional assets where repositioning development opportunities to alternative uses are becoming more prevalent," he said.

 Mr Gartland said they were anticipating strong demand for similar assets in the second half of this year.

“What COVID-19 has very much reinforced is the importance of non-discretionary retail and the important role that town centre assets have in serving the community," he said.

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