Coles Woodend, a 3,780m2 regional freestanding supermarket sold for $33.3 million, which represented a 4.31% yield. The property was sold to local diversified property player DeGroup.
Stonebridge Property Group acted as sole agent on behalf of Coles Group Property Developments Ltd who constructed the supermarket in late 2018. The sale represents a record price for a regional Victorian freestanding supermarket investment. The campaign was highly competitive with the asset yielding 14 formal offers with the DeGroup eventuating as the successful party.
Coles Chief Sustainability, Property and Export Officer Thinus Keeve said: “We’re always working to optimise our property portfolio and aim for our developments to play an integral part in the local communities that they serve.”
DeGroup Managing Director, Colin De Lutis recently purchased CS Square Shopping Centre from Lendlease (which was purchased in the same week as Coles Woodend totalling more than $160 million in retail acquisitions within that week). DeGroup also own Bacchus Marsh Village Shopping Centre, Somerville Shopping Centre and Sanctuary Lakes Shopping Centre.
Colin De Lutis said: “Coles Woodend is a set and forget investment for us which is ideal for our superfund. We also saw a major opportunity to take advantage of the current market dislocation in pricing between retail investment yields and bond rates, which we expect to continue for some time to come. The defensive nature of this asset is further strengthened due to its 10 year WALE. Our core focus with Coles Woodend will allow us to further leverage our portfolio scale which includes Sanctuary Lakes Shopping Centre, The Village Bacchus Marsh and Somerville Central which are all convenience style shopping centres. We still see a great future for shopping centres in this country, providing they are ‘right-sized’ for their catchment and are skewed towards food, convenience and services with emphasis on daily needs offerings”
“What became clear as soon the marketing campaign for Coles Woodend commenced was the sentiment for this type of investment product had heightened, particularly due to an increase in supermarket sales performance. This further cements these investments as the go-to recession or pandemic proof investment, similar to that of certain logistics asset”, said Stonebridge Partner, Justin Dowers said.
“The market continues to see the compression of yields in the retail asset class. “Based on the Coles Woodend result, it would appear that yields for new, freestanding supermarkets investments have sharpened in the order of 75 to 100 basis points within 12 months” Dowers added.
Stonebridge Director Kevin Tong said: “Due to the population growth that regional Victoria is experiencing, in addition to the 50% stamp duty savings, it is becoming evident that regional Victorian retail yields are compressing to a level close to, and in some cases in line with, Metropolitan Melbourne.”
Coles Woodend is located approximately 70km north-west of the Melbourne CBD, regional investments have continued to benefit from the aftermath of COVID-19, with the work from home trend allowing Victorians more freedom to move to regional locations.
