Investor demand for well-located supermarkets is expected to drive bids for Coles and Woolworths properties that are on the block this week alongside a Bunnings, with the centres having a combined value of about $50 million.
Two freestanding supermarkets leased to Coles and Woolworths and a Bunnings hardware centre are set to go under the hammer at this Wednesday’s Burgess Rawson portfolio auction in Melbourne.
The Woolworths supermarket in Kyabram, between Shepparton and Echuca in Victoria, is the largest in the region and sports a 20-year lease to the supermarket chain until 2034, with options to 2079.
The property was redeveloped and extended in 2014 and has since generated healthy sales growth with turnover for the three months up to October up by more than 8 per cent on last year.
The recently constructed freestanding 3,870sq m full-line Coles supermarket at 104 Lonsdale Street in Victoria’s Hamilton is also for sale.
It carries a net lease for 20 years to 2035 plus two further 10-year options to 2055. The property has been a high performer since the supermarket relocated from a smaller building and is just 0.192 per cent off its turnover threshold.
Net income is projected to reflect close to $1.24m per annum by December 2019, above the current base rent of $1.19m.
Meanwhile, the Bunnings on the Brooker Highway in Hobart’s Glenorchy spans 16,900sq m and is tipped to be highly contested.
Bunnings started trading on the significant 38,310sq m landholding in 2015. The rare 25-year triple net lease runs to 2040 with a 25-year option to follow. It has annual fixed three per cent increases through to 2040.
Burgess Rawson Melbourne director Shaun Venables said the prime assets were secured by favourable leases to Australia’s largest retailers — Wesfarmers, Coles and Woolworths — and were rarely offered to the investor market.
“These highly sought-after assets also have the ability to withstand changing market conditions,” he said.
A third smaller Ritchies IGA supermarket, at 14 Ireland Street in Bright, Victoria will also go to auction. The property is backed by the listed Metcash and has a ten-year lease to 2025 with a further two 10-year options to 2045.
Ritchies, which achieved over $1 billion in sales last year, acquired the IGA business from its previous operator in 2015. The 1,600 sqm supermarket includes a liquor department and continues to go from strength to strength, despite competition from a Woolworths supermarket.
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Written by Ben Wilmot, Australian Business Review
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