“Freestandingsupermarketsarein exceptionalhigh demand,especiallythose leased toWesfarmersor Woolworthssubsidiaries,howeverthe supplyof these assetstothe marketisrestricted to onlythree orfoureachyearin Victoria,”said MrDowers.
Itisunderstood that mostownersof these assetsareprivate investorsorprivate families,which mayhave beenheld in the familyfordecades.
“Sorarelyare theybuiltthat those whoownthemgenerallyhang on to themforgenerations.In that respecttheyhave become like collectors’items.”
“Itissimple to understandwhybuyersare attached tothese assets,thelease covenantsarestrong,lowmaintenance,ahedge against inflation and thesupermarket tenantsgenerallytake a long termviewon thestrategic sites.”
Retaildevelopersmorerecentlyhave adopted todevelop Neighbourhood ShoppingCentresasopposed to freestanding supermarkets,giventhe ofspecialtytenantssubstantiallyincrease the income from the development,thereforemakingitmorefeasible.
Within a retaildevelopment,specialtytenantswillpayin the orderof$600-$650sqmGross,while the Supermarketin the orderof $250-$300sqmGross.
The onlyfreestanding supermarket tobe developedinrecenttimeswastheColesSupermarketinHallam,developed byColesPropertyGroup.The propertywassoldviaauctioninOctober2013fora tightyield of6.00%,to a Victorian PrivateInvestor.
Other freestandingretailassetsalsoseemtobein high demand,with Bunningsin TorquaysellinginDecember2013for$11,200,002,representing a yield of 6.52%.It isunderstood that there were 12conforming Tenders forthe property.
“Giveninterestratesare at historic lows,buyersare seeing the benefitsof owningfreestanding retailassets,leased toWoolworths,Wesfarmersor Metcash subsidiaries,due to theirlowrisknature.Althoughyieldshave compressedto circa 6.0%,thereturnisstillatapremium to the cost of debt,for whatisperceivedas a blue chipinvestment.
At whatisa breathof fresh airto investors,two freestandingDan Murphy’sleasedinvestments,located inForestHilland Bendigoare being broughttothe market byCBREVictorianRetailInvestments.
“We are expecting a strongresponse forbothof theseDan Murphy’sinvestments,giventhe long leasecovenantstoone ofAustralia’snumberoneretailers.”
Preliminary interest in both assetshas been in the sub 6.50%yield bracket,whichwouldsee pricingin the orderof$5 million.
Both assetsare currentlyownedbyaPrivate VictorianFamily. A spokespersonforthefamily, MrRichard Guy,saidthe assetshave remainedunder the same ownershipformanyyears,with therent being paidconsistentlyeverymonth bythe tenants.
“The decision todivest was a timing thing,given theimproved market conditionsandlackofsupplyof these typesofinvestments;itwasthought that now wasanopportune momentto liquidate the assets.”
The assetsare being offeredindividuallyorin-one-linevia anExpressionsofInterestcampaign, closingWednesday12thMarch. For more information please contact Justin Dowers on 0438 098 805.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website atwww.cbre.com.au.