The strengthening appeal of Australia’s retail investment market has spurred the sale of a Coles supermarket in the NSW Southern Highlands to MPG Funds Management for $9.45 million.
Located at 13-19 Kirkham Street in the town of Moss Vale, the property comprises a 2,500sqm freestanding Coles supermarket – the only full line supermarket servicing the catchment.
The property, which is situated on a 7,199sqm strata title site, is currently leased to Coles until 2025, generating an estimated income of $561,547 per annum.
CBRE’s Justin Dowers and Nick Willis, who negotiated the sale on behalf of a private Victorian investor, said the sale reflected one of the strongest freestanding supermarket transactions in New South Wales this year.
“Translating to a yield of 5.9%, this sale demonstrates the robust performance of supermarket assets and the national level of investor demand, particularly for regional locations,” Mr Dowers said.
“The level of enquiry we are experiencing from locations outside of investors’ home states is growing rapidly, which is reflective of the low supply market but also a shift in culture of the commercial real estate market.”
MPG Funds Management’s Brett Gorman said the property’s strong tenancy profile presented an attractive investment opportunity.
“This property was particularly appealing due to it being underpinned by the continued performance of the Wesfarmers Ltd backed Coles’ covenant – and the fact that it is the only full line supermarket within the catchment,” Mr Gorman said.
“The standalone asset will be an excellent addition to the MPG Retail Brands Property Trust, which targets well-known tenants on long term leases.”
Mr Willis said investors were increasingly looking to interstate opportunities to source quality retail assets.
“Given that we are experiencing a low supply retail investment market, there is greater evidence of investors looking interstate for opportunities,” Mr Willis explained.
“We are seeing an increasing level of demand from buyers in regionally located investments, off the back of improved confidence in these areas, which are robust and growing in population.”
The sale follows the recent transaction of Dan Murphy’s in Wagga Wagga last week, showing a trend of regional activity in New South Wales. CBRE transacted Dan Murphy’s on a 5.3% yield to a private Sydney based investor.
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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 (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.