This article is from the Australian Property Journal archive
WOOLWORTHS has furthered its sale and leaseback program, netting $60 million in the past week from the sales of Keysborough South Shopping Centre and Woolworths Wadalba.
The supermarket major listed four Woolworths and BWS-anchored assets for sale on leaseback terms with expectations of $130 million in February. The portfolio also included the Spring Farm Shopping Centre near Campbelltown and the Bakewell Shopping Centre south east of Darwin.
CBRE agents Justin Dowers, Mark Wizel and Kevin Tong managed the $33.13 million sale of the Keysborough South asset, in Melbourne’s south east, via expressions of interest. Located on the corner of Chapel Rd and Hutton Rd, the recently built 5,437 sqm neighbourhood centre comprises a 4,201 sqm Woolworths supermarket, eight specialty retailers and 277 car spaces, and is situated on 18,440 sqm of land.
A local investor outplayed rivals including Asian interests for the centre, which sold with a 10 year lease to Woolworths and a net annual income of $1.79 million. The sale price represented a yield of 5.4% yield.
Dowers said the sale reflected the very strong demand for supermarket based properties with 11 offers recorded. All short listed parties submitted executed contracts at the end of the second round.
He said the demand had been substantially boosted by the negative COVID-19 impact on alternative asset classes.
“This is the quintessential defensive commercial property asset underpinned by a strong non-discretionary spend tenancy profile of 91% including a 77% GLA weighting to Woolworths.
“These are sought after assets at any time in the cycle, much more so in the extraordinary circumstances in which we currently find ourselves.”
He said the centre had also offered investors tax depreciation benefits and a position within the fast growing Dandenong region.
The centre is one of 13 neighbourhood centres sold by CBRE team over the last 24 months valued at more than $620 million. Initial yields have averaged 5.7%.
Wizel said there had been a definite trend over 2019 towards so-called defensive property investments, with neighbourhood centres and standalone supermarkets doing particularly well despite significant retail headwinds.
“As the year progressed and into 2020 we have taken an increasing number of enquiries from both traditional retail investors and a group of investors newly attracted to this type of asset. That includes regular equity market investors chasing yield and security, and those who are also attracted to the potential development upside.
“This latest result unambiguously indicates demand for retail with a heavy weighting towards non-discretionary spend tenancies remains very strong.”
Supermarket rivals selling off assets
Woolworths Wadalba, located between Newcastle and Gosford on the New South Wales central coast, sold last week for $26.15 million on a 5.69% yield to a high-net-worth Victorian investor. The centre has a building area of 3,905 sqm and is on a 1.55 hectare corner site.
Both Woolworths and rival Coles have been undertaking broader divestment programs of shopping centres anchored by their supermarkets, as well as standalone assets, over recent years.
Woolworths sold the Mandurah Greenfields Shopping Centre in to Western Australian fund manager Primewest for $32 million over summer on a yield of 5.7%.
Coles most recently offloaded a strata titled full-line offering and a Liquorland in Sydney’s West Ryde for $23.85 million to a Melbourne-based investor. The sale price of the 4,000 sqm property below an apartment building came in at a 5.85% yield on the 12-year lease to Coles.
Late last year, Coles sold Amaroo Village in Canberra for $29.5 million to a private interstate investor on a yield of 6.25%; a neighbourhood centre anchored by one of its supermarkets and a Kmart in Melbourne’s eastern suburb of Boronia for a price believed to be around $35 million; and as the Willowdale Shopping Centre in the Sydney’s south west for about $34.8 million.
Meanwhile, Aldi is looking to sell as much as $700 million worth of its distribution centres along the east coast with leaseback agreements. The four assets return about $30 million combined, and were offered through a sales campaign initially slated to close tomorrow.