This article is from the Australian Property Journal archive
BWP Trust is offloading a newly vacated former Bunnings warehouse in Wollongong for $40 million a Sydney-based developer and construction business with experience in the area, with its decision to progress a development scheme for the site paying off.
The hardware giant informed the Trust in the middle of last year that it would not exercise its five-year option and would be vacating the store when the lease was due to expire in early 2023.
“Following this notification, the Trust considered a number of options in relation to the property including redevelopment or sale, in so doing identifying that the highest and best use for the site was for high density residential redevelopment,” the trust said.
It then engaged consultants to progress a scheme to the Wollongong Council for development approval, whilst also re-leasing the property to the Australia Electoral Commission for a five- year period commencing from June 2023, affording the Trust holding income during redevelopment planning.
The recently completed public sales campaign completed the options review for the site and resulted in a number of offers from New South Wales-based developers, the Trust said.
It said the sale price reflects a 53.2% premium to the fair value prior to Bunnings confirming it would vacate the property.
“The transaction demonstrates the Trust’s ability to leverage its development capability and external networks to create value by progressing the site’s future development for a higher and better use”, said BWP Trust’s managing director, Mark Scatena said.
“The sale price also reflects the strong underlying land value of the site.”
Proceeds from the divestment will initially be use to reduce drawn debt, while the trust retains headroom to fund acquisitions and developments as opportunities arise.
“The Trust is seeing an increased number of opportunities in the market to acquire properties on yields it considers to be more reflective of risk,” Scatena said.
“Examples of this include our recently completed acquisitions of the Broadmeadows Homemaker Centre in Victoria and the Southport Showrooms in Queensland, with both sites adjoining BWP Trust-owned Bunnings Warehouses and acquired for $20.0 million and $10.0 million, respectively, representing a weighted average initial yield of 6.8%.”
