This article is from the Australian Property Journal archive
PROPERTY funds manager MPG has snapped up a strata-titled Aldi supermarket at the base of a recently completed tower on Melbourne’s CBD fringe $14.415 million.
MPG’s acquisition comes hot on the heels of its $14 million purchase of another strata-titled asset, a Sunshine office building in Melbourne’s west occupied by the Victorian government, on a 6.25% yield.
The Aldi is at the base of Lechte Corporation, CDL Australia and Crema Group’s residential development The Marker at 512 Spencer Street in West Melbourne.
Construction on the $87 million project was completed a year ago and Aldi has a 14-year lease. The sale price represented a yield of 5.47%.
“Despite some interest rate uncertainty, MPG will continue to seek to purchase quality properties with strong fundamentals such as this Aldi West Melbourne. The property further bolsters our fund and will provide attractive CPI growth with long-term security with Aldi as the tenant,” said Brett Gorman of MPG Funds Management.
Colliers’ Tim McIntosh and Stonebridge’s Justin Dowers, Rorey James and Kevin Tong handled the sale.
It arrives at the same time as another strata-titled supermarket, a Coles in Fishermans Bend at the base of the brand-new 31-storey R.Iconic residential tower, sold for $17.5 million.
McIntosh said supermarket investments remain at the top of retail investors’ wish list, motivated by inflation-led superior returns and high conviction in tenant longevity beyond initial terms.
The first half of 2023 was characterised by scarce supply, he said, and only one Victoria supermarket sale was recorded – Woolworths Kerang, for $16.25 million. However, activity has picked up in the second half, with Woolworths Metro Clifton Hill, Coles Hampton, and Woolworths Monbulk all selling.
Dowers said the Supermarket sector is demonstrating strong resilience through multiple interest rate rises as transaction activity remains robust.
“This continued strength reflects the sector’s appeal as a defensive asset class, which will capitalise on record population growth in Australia.”