Retail Value-Add Delivers Outsized Investment Returns

September 14, 2021

Retail Value-Add Delivers Outsized Investment Returns

For Stoic Asset Management, selecting great partners like Elanor Investors Group is the key to our success. Our co-investments in retail assets with Elanor are great examples.

Insights from the Manager

Retail Value-Add Delivers Outsized Investment Returns

The prevailing low interest rate environment and COVID-19 backdrop is seeing investors increasingly target defensive income generating assets. A significant beneficiary of this trend has been retail assets that are focused on non-discretionary, everyday needs, due to their defensive cash flow attributes.

Elanor has identified select retail assets that meet strict investment criteria and has executed value-add initiatives to transform these assets into non-discretionary, everyday needs offerings. These initiatives include significant tenant remixing strategies and the introduction of alternative uses.

Recent sales of non-discretionary focused retail assets highlight the demand for these investments: Casey Central (VIC), CS Square (VIC) and Marketown (NSW) demonstrate this trend with these assets being sold at an average capitalisation rate of 5.7%.

Riverside Plaza (NSW) and Clifford Gardens (QLD), our most recent retail investments, were acquired at an average capitalisation rate of 7.9%. At these assets, we are introducing new, non-discretionary, everyday needs offerings to significantly improve the defensiveness of the assets’ cash flows. Following the execution of our repositioning strategies, these assets, are likely to be well sought after – as evidenced by our recent divestment of Auburn Central (NSW) in December 2020 at a capitalisation rate of
5.75%.

Elanor’s market-leading capability in originating retail value-add opportunities, and executing the repositioning strategies for these assets, is delivering superior risk-adjusted returns for investors.

https://mailchi.mp/0386d8b870c8/elanor-clifford-gardens-fund-4778874?e=f582e9bb47



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