Coles parts ways with new $38m shopping centre

Coles has sold the Coburg North Village shopping centre for $38 million.

Supermarket heavyweight Coles has sold a newly developed shopping centre at Coburg in Melbourne to a locally-based private investor.

The fully-leased Coburg North Village attracted a flurry of interest, with agents receiving 27 bids for the property, including a number from interstate and overseas, before the Melbourne buyer secured the centre for $38 million on a sharp 4.94% yield.

The property is anchored by a Coles supermarket and features 6283sqm of lettable space on a 18,560sqm site with four street frontages.

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It was sold with new 15-year leases to Coles and Liquorland, and will return around $1.87 million in annual rent.

Savills’ Pat De Maria, Tom Forrest and Steven Lerche say they received an unprecedented 300 enquiries about the centre, as well as the 27 offers to purchase, highlighting the strength of the offering and of the retail market it general.

There are several fundamentals involved in making this centre so attractive to investors but the key factor was the Coles Supermarket lease

“In this case the limited availability of quality retail investments and the high level of demand resulted in offers totaling an extraordinary $860 million and a genuine record sub-5% yield for a fully leased neighborhood centre,” De Maria says.

The centre lies 9km north of Melbourne’s CBD and opened in August last year. A further 15 specialty retailers, including a medical centre and pharmacy, complement anchor tenant Coles its accompanying liquor store. It also has at-grade parking for 303 cars.

Forrest says blue chip lease covenants remain a key factor as major buyers and institutional investors shop around.

“There are several fundamentals involved in making this centre so attractive to investors but the key factor was the Coles Supermarket lease,” he says.

“It was, without doubt, an unequivocal vote of confidence in the Coles brand.”