This article is from the Australian Property Journal archive
TWO Bunnings Warehouse stores in regional Victoria have sold for a combined $16.75 million to separate private investors.
Bunnings Echuca fetched $8,550,000 and Bunnings Bairnsdale sold for $8,207,000.
CBRE Victorian retail investments Mark Wizel and Justin Dowers and Gross Waddell’s Andrew Waddell sold the properties on behalf of Bunnings.
Waddell noted that buyer interest in the second half of 2012 had been stronger than that experienced in the first six months of the year.
“There is little doubt that buyers are starting to quickly realise that the longer they leave money tied up in cash the less return they will receive over the medium to long term.
“We have seen a groundswell of Victorian based investors wanting to secure single tenant, well leased retail investment assets and the sales of both Bunnings Warehouse properties at Bairnsdale and Echuca are examples of this,” Waddell said.
Bunnings general manager – property development Andrew Marks said the sale and leaseback deal is part of the company’s ongoing flexible capital management approach and highlights the strength of the Bunnings covenant.
With interest rates expects to fall further and local banks supportive of providing debt funding for properties that offer strong lease covenants and long term WALEs, CBRE’s Justin Dowers said competition for assets such as the recently sold Bunnings Warehouses would continue to increase in 2013.
“The properties were each offered with a 12-year lease in place providing annual 3% increases and solid depreciation benefits for the successful buyers,” Dowers said.
In a sign of the times both properties achieved yields sharper than 8% with Echuca selling on a yield of 7.89% and Bairnsdale achieving a yield of 7.62%
“We believe that the yields achieved on both of these assets is not only a reflection of the current appetite from investors but also a reflection on the quality of the Bunnings covenant and the interest that Bunnings leased properties attract from the investor market,” Waddell said.
Victoria continues to lead the way in terms of achieving the sharpest yields for retail investment properties including the sale of Bunnings Port Melbourne, which achieved a yield of 6.81% when it transacted in 2010.
Property Review
