Discount department stores have shown their worth to investors during COVID

Two Kmarts and a Target store currently listed are attracting a broad spectrum of buyers, with the retailers perceived as sought-after tenants that have hit a “sweet spot” with shoppers during the pandemic.

As vaccination rates soar and eastern states emerge from lockdown, the Wesfarmers-owned retailers stand to benefit from pent-up demand for the in-store experience.

Discount department stores are desirable tenants right now, having been able to build customer trust by quickly adapting product lines during the pandemic, and by maintaining solid online distribution channels.

In August, Wesfarmers-owned Kmart Group, which includes Kmart, Target and Catch, posted a stronger-than-expected annual result with earnings up 69% to $693 million.

A 1,380sqm K Hub at 21-27 High Street in the northern Victorian town of Cobram has been listed through Burgess Rawson and Kerr Real Estate. K Hub is a smaller format Kmart, selling the brand’s most popular products and items.

The property offers a net income of $186,000 per annum, CPI rent reviews and investor-preferred net-lease terms, with Kmart paying all outgoings including land tax. It comes with a renewed five-year lease to March 2024 with options to extend to 2039.

With the Melbourne-based vendor upgrading to a larger, more local opportunity, it will go under the hammer by investment portfolio auction on 11 November.

Agent Shaun Venables at Burgess Rawson said the property’s price point of around $3 million is low enough to attract a wide range of buyers.

“It’s a very affordable offering,” he said. “The store has been a good performer for a long period of time. I think people underestimate how big the Cobram trade catchment is and how far people come.”