Charter Hall Retail REIT has raised $91 million through the sale of three non-core neighbourhood shopping centres as part of its divestment strategy and will use the funds to "reshape" the portfolio.
It is also taking advantage of the demand for food-anchored centres that are defying the weaker consumer sentiment in the more specialised apparel and non-discretionary retail segments.
According to Colliers International, despite the disruption and challenges faced, the demand for retail space within the Australian market remains near all-time highs, in part due to the number of new market entrants setting up operations in Australia.
Daniel Lees, director of research at Colliers International, said the majority of these tenants were seeking placement within super-prime assets along the eastern seaboard, where retail drivers are most favourable.
"We have witnessed increasing demand from premium brands seeking a presence within outlet centres which are trading particularly well," Mr Lees said.
"High levels of demand will assist in supporting the occupancy levels across both listed and unlisted retail portfolio assets."
Mr Lees said while overall retail sales volumes declined 13 per cent in the 2017 financial year to $6.64 billion, the weight of capital seeking placement within the direct retail asset class has grown.
"This is occurring due to increasing global pension and superannuation fund flows, against a global interest rate backdrop that remains low relative to long-term historical standards," Mr Lees said.
"As the market continues to digest the implications of new retail entrants and the associated disruption, it is reasonable to assume that new capital will become more selective, targeting tier one or super-prime assets that are ranked highly within their respective catchments."
Under the latest Charter Hall Retail deal, it has sold a freestanding Woolworths neighbourhood centre in Wynyard, Tasmania, to a private investor; Albany Creek Square, Brisbane to Fortius, and Renmark Square, Renmark, South Australia to Revelop for about $25 million.
The combined total sale price is broadly in line with book value. As part of its asset renewal program, the trust has also appointed Colliers International and Stonebridge Property Group to market the Gordon Centre in Sydney, including the Gordon Village and adjoining assets, for sale.
Charter Hall Retail chief executive Greg Chubb said the sales were "reshaping the portfolio into the leading Australian retail non-discretionary and convenience based portfolio".
"With continued investor demand for smaller retail assets, we have taken the opportunity to divest these three assets in order to maximise the value to the fund," Mr Chubb said.
"We have taken a judicious approach to reshaping the Harter Hall Retail REIT portfolio into what is the leading convenience-based supermarket-anchored shopping centre portfolio in Australia. During 2017, we completed the disposal of a number of lower-growth assets along with the acquisition of potential higher-growth assets to build a more resilient non-discretionary portfolio focused on the provision of food and services to local communities."
Mr Chubb, who replaced the retiring Scott Dundas last month, said the fund will continue its disciplined investment strategy to "enhance portfolio earnings through value-accretive redevelopments, selective acquisitions of properties with potential for higher growth, share buybacks and the divestment of lower growth assets".
He said the 2018 financial year earnings guidance remains unchanged at 30.2?? per unit to 30.6?? per unit.
