Victorian Woolworths sale sees owners quadruple money

Published on: 6 November 2019

A bidding frenzy has seen the price of a Woolworths supermarket in regional Victoria soar to almost four times the price its owners paid for it.

The Woolworths-leased property at Seymour, an hour north of Melbourne, sold for $15.47 million at Burgess Rawson’s latest Portfolio Auction.

Frenetic interest from a number of investors saw 53 bids placed before the hammer fell, with the final price representing a tight 5.18% yield, highlighting the ongoing demand for trophy retail assets with blue chip lease covenants.

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The Seymour result comes hot on the heels of the sale of another Woolworths at Leongatha earlier this month. The Leongatha property sold for $14.3 million on a yield of 5.35%, while Burgess Rawson sold a Coles supermarket in December for $23 million, on a similarly sharp yield of 5.20%.

The property was last sold – also through Burgess Rawson – in 1992, when two Melbourne families paid $4.175 million reflecting a yield that at the time prevailed in the market of 11.74% and subsequently held the asset for 27 years.

Burgess Rawson’s Graeme Watson, who remarkably was also the agent on the 1992 sale, says it was no surprise that the owners had chosen to retain the property for almost three decades.

The Seymour Woolworths occupies a significant tract of land.

“Supermarkets leased to Woolworths and Coles are practically bulletproof investments and ones that investors strongly compete for and rarely give up as they consider them to be trophy assets and privileges to own,” Watson says.

“Burgess Rawson’s involvement in this sector of supermarket and similar properties goes back almost 30 years, with in excess of 300 properties sold Australia wide over that span.

Constructed in 1983, the Seymour Woolworths spans 4675sqm on a 10,375sqm site and was built to stand the test of time, with a large store footprint in comparison to other 1980s stores meaning there was no need to extend it in the future, explained co-agent Shaun Venables.

Watson says the rent has doubled since 1992 when it was $390,000, underlining its continued growth and performance for the tenant.

The property at 28 Wallis St currently returns $800,000 net per annum from Woolworths, with a new percentage rental phase expected to commence within the next few lease years.

It is considered the number one supermarket in the Seymour area, which has a catchment of 20,000 people, a region that is enjoying considerable growth.

Burgess Rawson is excited to offer another freestanding supermarket, leased to Coles, in its final Portfolio Auction of 2019, at Crown Casino on December 11.

Published by Real Commercial


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