Large-format retail centre McGraths Hills Home has been sold to Sydney-based investment company Centennial for $66.8 million at a yield of 5.6 per cent, marking the company’s second major LFR acquisition in under six months.
The asset was acquired from Stirling Property Funds Management in a transaction CBRE senior national director James Douglas negotiated exclusively.
Anchored by several large-format retailers, including Bunnings Warehouse and Harvey Norman, the property is situated in the north-west of Sydney at 10 Industry Road, Vineyard.
The sale marks only the fourth LFR transaction completed in metropolitan Sydney over the past five years.
The purchase expands Centennial’s retail portfolio to five assets valued at around $350 million. It follows the group’s $52 million acquisition of Brisbane’s HomeCo at North Lakes from HM Capital earlier this year, taking Centennial’s total investment in the LFR sector to around $120 million.
“Our conviction is based on structural fundamentals rather than short-term market cycles. Large format retail has been on our radar for some time, but recent research definitely compelled us to act sooner, given LFR has delivered the strongest face rental growth of any retail sub-sector, with rents rising by 31 per cent since 2020 in Sydney,” said David Cupit at Centennial.
Located approximately 51km from the CBD, the centre is marketed as one of the city’s largest and fastest-growing residential corridors, with a 37,840sqm site along Windsor Road within the McGraths Hill bulky goods and industrial precinct.
“The combination of population growth, constrained land supply, continued revenue growth from national retailers and stable recurring cash flows with embedded growth and low incentives creates an attractive long-term income profile,” said Lucas Forbes, Centennial’s head of retail.
Douglas highlighted the continued demand for LFR assets, driven by strategic land holdings, transparent cash flows, and sustainable rental growth backed by national and ASX-listed tenant bases.
“LFR assets continue to be tightly held and rarely traded, with investors attracted to the strategic landholdings that these centres typically occupy and the potential for future development,” said Douglas. “They also offer transparent and reliable cash flows, with strong in-built rental growth and high expense recoveries, providing a sustainable base for income growth.”
According to Douglas, the LFR sector delivered investment returns averaging over 12.8 per cent per annum, supported by rising rental rates and yield compression. New retail supply is projected to remain approximately 12 per cent below five-year historical averages.
“Retailers have gravitated to big box shops to maximise productivity while consumers have benefited from a wider selection of products and convenient parking,” said Douglas.
Supported by a flexible planning scheme, the centre is zoned B5 Business Development and Special Purpose (SP2) Infrastructure, providing potential future developments, subject to council approval.
- Further reading: The sale of New Zealand’s premier LFR asset to kick start 2025.
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