Jerry cans at Bunnings Warehouse on Thursday March 26, 2026
Boutique property fund manager Centennial has swooped on McGraths Hill Home and will put the well-established large format retail centre located in Vineyard, NSW, into a new property trust.
It is buying the complex at 10 Industry Road from Sydney-based property fund manager Stirling Property Funds for $66.8m as the sector continues to draw in fresh investment.
The deal will show a yield of about 5.75 per cent with Stirling exiting profitably after it picked up the McGraths Hills complex for $55m in 2024.
Situated 51km from the Sydney CBD in the North West Growth Area, one of the city’s largest and fastest growing residential corridors, the centre is fully leased, with secure lease tenure to major ASX-listed and national tenants, including Bunnings, Harvey Norman and BCF.
Large format retail assets are tightly held and rarely traded, with investors attracted to the strategic landholdings that these centres typically occupy and the potential for future development. They spin off transparent and reliable cashflows, with strong in-built rental growth and high expense recoveries, providing a sustainable base for income growth.
McGraths Hill Home sits on a land-rich 3.78ha site, situated on the highly trafficked Windsor Road within the McGraths Hill bulky goods and industrial precinct. The 16,478sq m complex draws on a burgeoning residential population and a growing main trade area.
Centennial, which has a track record in value-add strategies for institutions and high-net-worth investors, manages a property empire with $2.7bn of assets.
It is looking to raise $37.3m from wealthy investors and says the fund will deliver a consistent income for investors with the potential for capital growth from rental reversion and reconfiguration of the site.
It expects upside income from rental reversion of leases at renewal and there is also the potential for further capital growth if the major tenant, Bunnings Warehouse vacates the premises. The retailer’s space could be reconfigured to be leased out at much higher rental income.
The centre is full and has a weighted average lease expiry of 3.9 years by income and average fixed rental increases of 3.2 per cent per annum.
The manager is targeting a five-year distribution yield of 4.7 per cent to 5.5 per cent per annum. But the distributions may be impacted if Bunnings vacates earlier, at expiry in December 2029.