This article is from the Australian Property Journal archive
NEWMARK Capital has acquired a Bunnings Warehouse site in Sydney’s Eastgardens for $75 million, soon after settling on its purchase of a Bunnings development in Melbourne as the large format sector continues to outperform its retail peers.
The properties will be added to the Newmark Hardware Trust, for which Newmark is considering listing on the ASX.
It now has six Bunnings Warehouses across the eastern seaboard.
“These are quality additions to the trust, providing long-term benefits to investors,” general manager, funds management of Newmark Capital, Stuart Fox said.
“It demonstrates our commitment to the large format retail sector and our ability to secure quality assets in a competitive market while applying our disciplined approach to asset selection.”
The Eastgardens property is the trust’s second acquisition in New South Wales. It covers 2.3 hectares with a purpose-built Bunnings Warehouse of 14,920 sqm that began trading in June 2017, and serves a large catchment area in the eastern suburbs that includes the immediate surrounding suburbs of Maroubra, Pagewood and Botany.
“It is a very attractive metropolitan location in an area where there are high barriers to entry for securing prime real estate,” Fox said.
Colliers’ James Wilson negotiated the off-market sale.
“We are experiencing unprecedented demand for NSW retail investments from investors seeking to deploy capital in resilient assets with strong underlying land value, long-term income growth and covenant security,” he said.
“This is a benchmark result and reflects the growing demand of institutional and private capital targeting this asset class,” he said.
Neighbourhood retail and large format retail assets accounted for $3 billion of total retail transaction volumes in 2020 – almost two thirds of all investment during the year – aas the build-up of household savings and increase in home building and renovation activity drove an investment shift to non-discretionary retail assets and homeware-based tenants on long leases. The trend has carried through into the early part of this year, according to The Data App.
Charter Hall wholesale partnership LWHP acquired six Bunnings assets late last year for $353 million, marking the acquisitive platform’s seventh acquisition of a Bunnings platform since 2006. Home Consortium’s own newly-listed spin-off, the Daily Needs REIT, picked up a western Sydney Bunnings over the summer for $56 million.
Newmark’s recently purchased Melbourne site is in the northern suburb of Preston and will house a Bunnings Warehouse that is expected to open in May next year. It is at the intersection of Bell Street and Chifley Drive and has an estimated end value of about $85 million.
The new-format, multi-level centre of approximately 18,612 sqm will have 525 car parks. The trust has acquired the land, with Bunnings funding and managing the construction works through to completion. The sale of the Preston site was negotiated by David Butera of Mulcahy Butera and Stuart Taylor of JLL.
Newmark said it is still considering options for the future capital structure of its trust. An ASX-listed spin off would reportedly have eight assets worth $506 million, with a 7.9-year weighted average lease expiry and 5.15% capitalisation rate.
“Newmark’s focus for the trust is acquiring secure and stable assets that add geographic diversity and strengthen our existing portfolio,” Fox said.
In recent weeks, Newmark has partnered with developer Tim Gurner and real estate fund manager Qualitas to reinvigorate its $1.4 billion plans for an overhaul of the mixed use Jam Factory precinct in Melbourne.
