Sale of land and buildings at Bunnings Warehouse Hastings represents strongest yield since 2007

Melbourne, 1 May 2014 – The land and buildings at Bunnings Warehouse Hastings in Victoria has sold for $15,160,000 reflecting the sharpest yield for this style of investment in since 2007.

Selling agents Mark Wizel and Justin Dowers of CBRE, in conjunction with Andrew Waddell of Gross Waddell, acted on behalf of Bunnings to complete the transaction with a Victorian-based private syndicator.

Mr Wizel, CBRE’s Victorian Retail Investments Director, said the 6.49% sale yield was the tightest achieved on the land and buildings at a Bunnings Warehouse in almost a decade - the result reflecting the strong appetite for well leased retail investments.

“Many passive investors continue to flock to this style of asset, with the current low cost and availability of debt, improved retailing conditions and a lack of suitable investment opportunities driving the market to highs not seen since 2007,” Mr Wizel said.

“We have seen yields really compress in the past 18 months, with the strength of the Bunnings tenancy covenant a real draw card for investors with long term investment strategies. We estimate that compression to be around 200 basis points.”

Andrew Marks, Bunnings General Manager Property, added; “We are seeing significant demand from across the whole spectrum of the property market for Bunnings assets. We see this driven by the ongoing strength of our business as well as the quality of our real estate. ”

The 9,000 square metre Hastings warehouse is located at Frankston Flinders Road, Hastings. It was leased back to Bunnings on a 12 year term.

“There are limited opportunities to secure new Bunnings asset, and when they do become available we are experiencing unprecedented demand, Mr Wizel said.

Mr Wizel linked the buyer interest to the strength of the Bunnings retail business and the structure of the leasebacks, which were typically 12 year terms with annual rental increases.

Site location was another draw card, with Bunnings recognised as a market leader in its site acquisition process.  These are all factors in the prices being achieved for Bunnings assets, Mr Wizel said.