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Coles Clayton sells for $17 million

Coles Clayton, the first Victorian supermarket was purchased recently by a local private investor after it was offered in the market for $17,115,000 this year, beating other high profile investors, Asian investors and developers.

The CBRE Victorian Retail Investments said in a statement yesterday its team of Mark Wizel, Justin Dowers, Kevin Tong and Dylan Kilner negotiated the sale on behalf of a deceased estate. The property has been owned by the same family for over 20 years.

CBRE national director Wizel said the sale price represented an unprecedented yield of 2.57%, which indicated that buyers were seeing greater value in long-term, metropolitan retail opportunities. He said whilst the vendors had every intention of taking the property to auction, the offer was compelling enough for the estate trustee to sell prior.

“Although there was over 15 years of tenure to Coles, the buyer took a longer term view on the opportunity of owning a prominent Commercial 1 Zoned allotment within Metropolitan Melbourne,’’ Wizel said.

Located on the corner of Centre Road and Cooke Street, the freestanding, 2850 square metre supermarket, which has been trading from the 2883 square metre site since 1998, was sold subject to an estimated net annual income of $440,552.

The transaction came early during an international marketing campaign conducted via CBRE’s Premium Property Portfolio Auction Platform whereby unsolicited unconditional contracts were submitted one week prior to the auction scheduled for Thursday, March 22.

The sale follows a string of recent retail investments underwritten by long leases to Coles, Woolworths or IGA. These include record prices and yields achieved for subsidiary brands including Dan Murphy’s, Bunnings Warehouses and Officeworks premises.

The previous record was held by Woolworths Middle Brighton which sold for $32 million on a 3.8% yield, and more recently Dan Murphys, Alphington which sold for $22.5 million on a yield of 3.2% via CBRE’s Premium Property Portfolio Auction Platform. Dowers said there was increased demand for safe haven retail investments like supermarkets across Australia and more specifically in Victoria.

“Investors are still taking a long term view on the retail sector with operators like Coles and Woolworths having established an exceptional track record of performance. Freestanding metropolitan supermarkets with attributes like a net lease structure, a consistent track record of trading in excess of turnover threshold and a blue chip tenant present compelling investment credentials,’’ Dowers said.

He said the strength of Victoria’s retail investment market was set to be tested again with the upcoming sale of IGA Coburg which is secured on a 15 year lease to Metcash and will be sold by CBRE’s Premium Property Portfolio Auction on March 22 at CBRE’s Melbourne Head Office.

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