This article is from the Australian Property Journal archive
FOLLOWING the first major supermarket sales campaign in Victoria for the year, Woolworths Eltham has sold $35 million at a 3.3% yield to private Melbourne-based investor.
The freestanding full-line supermarket, located at 22 Pryor and 23 Arthur Streets in the affluent Eltham, around 20km north east of the Melbourne CBD, boasts circa 3,744sqm of GLAR on a 9,044sqm Activity Centre zoned site.
Justin Dowers and Kevin Tong from Stonebridge Property Group, along with David Bourke, Chris James and Shawn Luo from Fitzroys managed the sale via an expressions of interest campaign, on behalf of the vendor, a private family who have held the asset for more than 20 years.
“The result of Woolworths Eltham at a 3.3% yield is the sale the market needed to reaffirm the underlying demand for this type of investment product,” said Dowers.
“Given that we had 15 offers on the property and achieved a yield at this level would indicate that although buyers may be anticipating a higher interest rate environment, there is greater concern of holding cash when entering into a higher inflationary period.”
Bringing in an estimated net income of around $1,166,228 per annum, the asset is securely leased to Woolworths Group Limited on a five year term with five further five year options.
“Eltham Woolworths was a high performing supermarket and it was proven that supermarket investments, especially those which trade above their percentage rent threshold, are one of the best investment products to provide a hedge against inflation,” added Bourke.
The triple-fronted site sits within Eltham’s core commercial and retail precinct, amongst major national tenants and amenity, while also as being well serviced by public transport, with the Eltham Train Station and Bus Interchange within 200 metres.
Constructed in 2000, Woolworths Eltham also offers ample parking for around 384 vehicles across two levels.
“30% of the bids received were from investors with Asian heritage and although they were not the eventual purchaser it further highlighted the demand from the Asian investor buyer pool for supermarket investments in Australia,” said Tong.
The successful sale of the asset comes as the 1,827sqm Woolworths Hawthorn supermarket within the Glenferrie Centre entered the market last month, with the campaign also being managed by Stonebridge.
“In the current environment freestanding supermarkets are seen as one of the most secure opportunities, especially those with underlying landholdings,” concluded Luo.