Elermore Shopping Centre sold for $18m

The Bamm Group, owners of the Elermore Shopping Centre, have sold their neighbourhood mall in Newcastle to a private syndicate for $18 million, seven years after first buying and then redeveloping the site.
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Steven Lerche, who advised on the sale, originally sold the Elermore Shopping Centre to Bamm Group in 2011 for $8.3 million with Ben Nastasi acting on behalf of the purchaser. At the time, the property was anchored by BiLo on a short lease and now boasts a Ritchies SUPA IGA supermarket supported by 17 non-discretionary specialty tenants.

According to Mr Lerche, national director, retail investments at Savills , who sold the asset with colleagues Andrew Palmer and Mr Nastasi, Newcastle is seeing a surge in investment activity, largely stimulated by the $6.55 billion State Government investment mandate which has brought to light the new light rail system on Hunter Street, the new transport interchange at Wickham and construction of the Newcastle City University Campus.

???It was sold on a 6.8 per cent passing net yield.

“We are seeing a lot of investor interest come from the Sydney investment market and interstate markets such as Melbourne and Brisbane due to the significant growth prospects of Newcastle,” Mr Lerche said.

“Retail assets have been in particular favour with developers due to their strategic locations, large site area, existing income stream and potential to re-develop under the existing planning controls.”

Andrew Palmer, associate director, retail investments at Savills, with the median house price in Newcastle at $595,000 compared to about $1.17million in Sydney (according to Domain Group’s rental and house price report), “investors are taking notice”.

“Elermore Vale and its surrounding suburbs are certainly set to reap the benefits of this surge in investor demand,” Mr Palmer said.

Enough of the stuff: Tax break could fix affliction

Simon Letch Opinion 15th Nov?? AFR 13 Dec 2013 Christmas Shopping Retail Generic Sydney CBD. Pic Sasha Woolley
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If our grandparents could see us now, what would they think? They’d be amazed by our affluence, but shocked by our wastefulness.

You’d never know it to hear us grousing about the cost of living, but most of us are living more prosperous, comfortable, even opulent lives than ns have ever lived.

We live in a consumer society, surrounded by our possessions. We’re always buying more stuff, more gadgets, an extra car, more TVs for other rooms, more laptops, iPads and smartphones.

We update to the latest model, even though the old one’s working fine, and make sure our car is never more than a few years old.

We buy new clothes all the time – a lot on impulse – filling our wardrobes with stuff we wear rarely, if ever.

We buy more food than we can eat, chucking it out when it’s no longer fresh so we can buy another lot.

Why do we keep buying and buying? Short answer: because we can afford to. Long answer: because, for a host of reasons, we’ve become addicted to consumption, whether or not it provides lasting satisfaction. We suffer from “affluenza”.

Many of us engage in “conspicuous consumption” so as to impress other people with our wealth – with how well we’re doing in the materialist race. Can’t have the neighbours thinking we can’t afford the latest model.

Other people use their hairstyles or the clothes they wear to express their individuality or, paradoxically, to signal their membership of a particular tribe.

I heard about a partner in a law firm remarking with disapproval that whenever any young person was made a partner they immediately went out and bought a black Volvo. But, someone asked, don’t you have a black Volvo yourself? Oh, no, he said, mine’s blue.

In his new book Curing Affluenza, Richard Denniss, chief economist of The Institute, observes that, these days, much consumption is done for symbolic, signalling reasons, not because we actually need the stuff.

And then there’s retail therapy – stuff we buy purely for the fleeting thrill we get from buying some new thing.

If something’s telling you all this needless consumption can’t be a good thing, you’re not wrong. What’s less obvious is why: because of the damage it does to the natural environment.

Not only the extra emissions of greenhouse gasses, but also excessive use of natural resources – both non-renewable and renewable, when usage exceeds the rate at which they can be renewed (think fish in the sea).

The richest 15 per cent of the globe’s 7.6 billion population can continue living the high life only for as long as we have the wealth to commandeer more and more of the other 85 per cent’s share of the world’s natural resources.

But as the world’s poor, led by India and China, succeed in raising their material living standards towards ours, this will get ever harder. It is not physically possible for all the world’s population to live the wasteful lives we do. Nothing like all the world’s population.

How can we stop using more than our fair share of the globe’s natural resources? Denniss says we can start by distinguishing between consumerism, which is bad, and materialism, which isn’t. Huh?

He defines consumerism as the love of buying things, whereas materialism is just the love of things. Meaning the latter is a cure for the former. The more we love and care for the stuff we’ve already got, repairing it when it breaks, the less we’re tempted to buy things we don’t need.

It’s true the capitalist system invests heavily in marketing and advertising to con us into believing we need to buy more and more stuff.

But we’re free to resist the system’s blandishments. Indeed, I often think the people most successful in the system are those who most resist.

Unusually for an economist, Denniss argues that much of what we do – and buy – we do for cultural reasons. Because it’s the normal, accepted thing to do.

But, just as our grandparents weren’t as spendthrift as we are, culture can change. And you need less than a majority of people changing their behaviour to reach the critical mass that prompts most other people to join them and, by doing so, cause an improvement in the culture.

If we all stopped buying stuff we don’t need, however, wouldn’t that cause economic growth to falter and unemployment to shoot up?

Yes it would – if that’s all we did. The trick is that every dollar we spend helps to create jobs. So we need to keep spending, but we don’t need to keep spending wastefully.

There are a host of things we could spend on – better health, better education, better public infrastructure, better lives for the disabled and the elderly, less congestion, less pollution – that would yield us more satisfaction while doing less damage to the environment.

I have a feeling, however, that the cure to affluenza will require more than just changed behaviour by enough individuals. We replace rather than repair many things because the cost of repairers’ labour greatly exceeds the cost of the material parts we throw away.

We need to rejig the tax system so we reduce the tax on “goods” – labour income – and increase the tax on “bads” – use of natural resources.

Ross Gittins is the Herald’s economics editor.

Vita Loca: Investorsnot buying botox plan from Maxine Horne’s phone reseller

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In this kind of retail market, it makes sense to have a Plan B, but investors have taken a dim view of Vita Group founder Maxine Horne, injecting a little botox into her Telstra retail operator.

Vita, which owns Fone Zone, has watched its stock drop more than 20 per cent since announcing last month it had agreed to enter the superficial zone with the acquisition of Clear Complexions.

Vita shares continued to fall on Tuesday after it announced that the deal had been consummated.

It was great news for the Complexions team, which received $1 million worth of stock at these reduced prices, as well as $8.5 million in cash.

Let’s not kid ourselves, Horne would not have considered such a drastic move if it wasn’t for the fact that Andy Penn’s Telstra has started to squeeze profit margins at its Fone Zone stores.

So how do you sell your shareholders on the move from selling mobiles and broadband to chemical facial peels, skin peels, botox injections, body sculpting and tattoo removal?

“There is great alignment between the two businesses … both organisations are firmly focused on meeting customers’ needs, and on delivering an exceptional customer experience,” said Horne when the deal was announced last month.

The non-invasive medical medical aesthetics (NIMA) market is worth around $1 billion a year, it has high margins, a clear growth trajectory and the opportunity to consolidate a fragmented sector. In other words, it is the same opportunity that presented itself in the mobile phone retail business all those decades ago.

Horne backed her words with the purchase of 561,000 shares this month for just over $700,000, but it’s small beer compared with the 25 million shares she sold last year for $92 million. History lesson

What is it that Mark Twain once said about history not repeating itself, but it rhymes?

Two years have passed since a troubled, but still viable, Slater and Gordon changed auditors.

The team from Pitcher Partners was replaced with some smart bods from Ernst & Young.

As they say in the classics, the rest is history. Pitcher’s audit team have now been dragged into the Slater and Gordon class action over allegations they wrongly signed off on accounts that inflated the firm’s revenue. The firm denies the allegation.

But CBD noted back in 2015 that there had been another occasion where an audit team from E&Y replaced Pitcher.

It was in 2007. Eddy Grove’s childcare empire, ABC Learning, called in E&Y to replace Pitcher.

The new auditors, led by E&Y’s Brian Long, who went on to become Network Ten’s chairman (speaking of collapses), challenged ABC’s treatment of revenue and earnings in its half-year accounts.

The revisions created a vastly different financial picture of the group at its half-year results in February 2008 and sent the share price spiralling.

The childcare empire collapsed before the year was out.

In 2012, ASIC’s Greg Medcraft received an enforceable undertaking from ABC’s former auditor, Pitcher Partner Simon Green, suspending him for five years.

“Auditors are important gatekeepers who are relied upon to provide assurance and market confidence in the quality of financial reports,” said Medcraft at the time.

“ASIC continues to focus auditors on the importance of applying professional scepticism.”

It looks as if our top corporate cop did not do a good job on this front. Medcraft was still slamming the audit quality of our big firms before his departure this month.

“Often what we found was that there was a lack of scepticism and generally a lack of challenging what was in front of them,” said Medcraft after an ASIC review of the work of big audit firms. Freelance economist

Freelancer founder Matt Barrie has taken time out from the important job of ridiculing Sydney’s nightlife, to sound off about the entire economy in an essay he has posted on social media. ‘s Economy is a House of Cards #auspol#politics#economics#australiahttps://t成都夜场招聘/DCJtZsW16z??? Matt Barrie (@matt_barrie) November 13, 2017

City-fringe offices fetch big prices

MARKET WRAP
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SALES

South Melbourne

Investors and owner-occupiers are willing to pay strong prices for city-fringe offices. A vacant two-level office building at 320 Kings Way sold under the hammer for $1.22 million, at a building rate of $5550 per sq m. Fitzroys’ Jordan Ceppi and David Bourke said the new owner will re-lease the property, looking to take advantage of strong demand and rising rents in the city fringe market.

Moonee Ponds

A family that passed down a shop at 28 Puckle Street through generations has sold it for $1.7 million, on a tight yield of 3.5 per cent. Fitzroys’ Chris Kombi, Terence Yeh and Ervin Niyaz said it was the first time in 105 years it had been offered for sale with multiple bidders pushing the price of the two-level building, leased to Designer Mens Clothing, $200,000 beyond the reserve.

Hawthorn East

Floating is not normally associated with developers but one has snapped up a float centre at 2/96 Camberwell Road for $1.64 million. Fitzroys’ Chris James said the 320 sq m space sold on a 6 per cent yield. The four-level boutique Elmington development, on the corner of Camberwell Road and Roseberry streets, is leased to flotation tank business Beyond Rest, returning around $100,000 per annum.

Balwyn

A single-level strata shop at 328 Belmore Road has sold under the hammer for $570,000. A mixture of investors, including the owner of a neighbouring property, pushed the yield to 3.89 per cent, Ray White Oakleigh’s George Kelepouris said. The shop’s tenant, jewellery and craft shop iOpal, has a three-year lease returning $22,200 per annum, plus GST and outgoings.

Coburg North

A warehouse workshop on two titles at 16-20 Irene Avenue was sold for $1,809,000 by Anthony Carbone and Craig McKellar from CVA. The 1615 sq m building was fought over by two bidders at auction.

Hughesdale

An investor from Port Fairy has paid $425,000 for 40 Poath Road at an auction. The 60 sq m shop is leased to Sue Wright body clinic with about one year remaining on the lease with a further two options of three years. The current rental is $21,900 per annum (plus GST and outgoings), Ray White Oakleigh’s Ryan Amler said.

Cheltenham

A two-storey office warehouse at Unit 1, 132-140 Keys Road, was sold off the plan for $938,500 by John Nockles and Seamus Bolst from CVA. The office on the Modus Business Estate was purchased by an owner-occupier, representing a building rate of $3686.17 sq m.

Somerville

The YMCA at 55 Grant Road has been sold by Tom Crowder of Nichols Crowder for $2.65 million. The modern 1841 sq m building on land of 5037 sq m contains a 25-metre heated swimming pool, a hydro pool, cardio room, gymnasium, change rooms and cafe. It sold on a yield of 6.9 per cent.

LEASES

Melbourne

Melbourne Pasta Bar is set to open its first Italian restaurant in a lane just off Little Collins Street, next to the new retail precinct that is part of 360 Collins Street. The Pasta Bar will pay $126,000 per annum gross rent for a 130 sq m space on a five-year lease with two options. The deal was negotiated by CBRE’s Tan Thach, Zelman Ainsworth and Samantha Hunt.

West Melbourne

Co-working group Zany Wacko and PR Asia have leased 3/119-123 Adderley Street for $136,000 per annum gross, CBRE’s Jake George and Guy Naselli said. The property has a two-level office/showroom along with a large clear-span, high-clearance warehouse.

Frankston

Ray White Frankston has leased a 520 sq m office building at 36 Playne Street on net annual rental of $180,000. The agency signed a 5+5 year lease term, said Knight Frank’s Nick Sharkey and James Treloar. The building sold in September for $2.15 million with the new lease reflecting a yield of over 8 per cent.

Moonee Ponds

Two national fashion tenants have signed up for new spaces in the Puckle Street retail strip. Fitzroys’ Terence Yeh negotiated the leases of casualwear label Sportscraft at 63 Puckle Street and 66 Puckle Street to fashion accessories and handbags retailer Colette by Colette Hayman. Sportscraft signed a 3+3-year deal at $95,000 per annum net with 4 per cent increases, while Colette will move into a 150 sq m shop on a 5+5-year deal and pay $80,000 per annum with 4 per cent increases.

Melbourne

A whole floor in the historic and character-filled Austral Building at 115 Collins Street has been leased by a financial services group on a five-year deal at $155,000 per annum plus GST, Fitzroys’ Douglas Murray and Stephen Land said.

Abbotsford

Developer Albert Dadon has taken a lease on a showroom, warehouse and office at 1 Grosvenor Street. Gray Johnson’s Rory White said the 515 sq m building was previously tenanted by a picture framing business that needed to move. Dadon signed a three-year lease with a three-year option to renew at the asking annual rental of $72,000 plus GST and building outgoings.

MOVERS

Fund manager Impact Investment Group has appointed Daniel Madhavan chief executive. Mr Madhavan joins Impact from JB Were and Goldman Sachs JB Were where he served in a variety of roles, including as acting CEO, chief operating officer and head of NSW.

Former Port Adelaide AFL player Steven Salopek has joined Knight Frank as a senior sales and leasing executive in Glen Waverley. Mr Salopek retired from the AFL in 2012 and began his property career at Crabtrees Real Estate.

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Syndicate swoops on Hawthorn office

A syndicate has snapped up aged care provider Benetas’ head office in East Hawthorn, paying $24.65 million on a 5.5 per cent yield.
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The deal, struck at a value above expectations, shows the strength of Melbourne’s suburban office market where yields have already compressed 75 points in the past year.

The two-storey 4000 square metre building at 785-789 Toorak Road is 94 per cent leased to seven tenants with a slender two-year average lease term.

Colliers International agent Peter Bremner, who negotiated the deal with JLL agents Josh Tebb and Marcus Quinn, said the suburban office market is “very very strong”.

“We can’t get enough stock. Anything we get sells,” Mr Bremner said.

The buyer, a local syndicate, has plans to reposition the slightly underlet building which is close to the Monash Freeway and Tooronga Shopping Centre. Rents have been rising in the inner eastern market and incentives falling as tenants are priced out of the fringe office precincts.

Contracts were exchanged within a week of the expressions of interest campaign closing, he said.

Eight strong offers were made for the building, mostly by local buyers, Mr Tebb said.

“It’s on a 3000 square metre site so it’s gone some development potential but we didn’t see a lot of interest from offshore buyers,” he said.

“The major disappointment was that there weren’t two or three more of them to sell. The appetite for good quality sub-$30 million assets is still very strong,” he said.

In September, Peak Equities snapped up the Camberwell Junction headquarters of n Pharmaceutical Industries, paying $27.5 million for the leasehold property.

Records show financial services group, IOOF bought the East Hawthorn building in 2001 for $10.1 million. It was developed by Folkestone in 1999 and designed by architects Peddle Thorp.

IOOF senior portfolio manager Simon Gross said “After 17 years of ownership and a recent refurbishment, the timing was right to take advantage of the strong Hawthorn office market and divest while the building was close to 100 per cent leased.”

Recent research by Colliers International on the metropolitan office market shows average yields tightened 75 basis points in the inner eastern market to 5.75 per cent.

The vacancy rate of 5 per cent is forecast to shrink to 3.7 per by September next year, with no new stock coming into the market.

A-grade rents increased 4 per cent and B-grade rents by 6 per cent in the six months to September 2017 and incentives have reduced to 13 per cent.

Colliers research manager Anika Wong said no new space will be ready until 2019 when 8000 square metres of office at 135-155 Camberwell Road is completed.

“The low vacancy is a result of growing tenant appeal in the fringe and inner east markets with tenants’ focuses on attracting and retaining employees. We forecast rents to lift around 6 per cent in the next 12 months as competition continues and demand outpaces supply,” Ms Wong said.