Developer Schiavello lands $44m Bunnings outlet deal
Investors are chasing Bunnings properties for the safe returns the hardware store presents. Picture: Andrew Henshaw
Charter Hall has sold off a Bunnings store in the southeast Melbourne suburb of Clyde North in a $44m deal that shows the market for the warehouses is strong.
The complex has been bought by private group Schiavello, which has interests ranging from furniture manufacturing, interior construction and property developments, including Melbourne’s Prima Tower.
The centre sold at a 4.9 per cent yield – a benchmark for the year that shows the strong demand for the chain’s covenant. But it was not quite as tight as when Charter Hall bought the centre for $42.3m in 2020, shortly after it opened. That showed a reported yield of 4.5 per cent, albeit when interest rates were lower.
Wesfarmers separately is looking to cash in on the rising demand for convenience retail assets. Picture: Peter Carruthers
Bunnings assets have been in focus. Wesfarmers last week struck a $143m deal to internalise the management of the main listed landlord of its Bunnings chain, BWP Trust. The move will help free up funds to upgrade some of the hardware giant’s big-box stores.
Wesfarmers separately is looking to cash in on the rising demand for convenience retail assets with the offer of a six-strong portfolio of Bunnings stores worth about $300m.
Charter Hall knows the sector well. A Charter Hall wholesale partnership, which comprised the firm, VFMC, Telstra Super as partners, also bought a $353m portfolio of six Bunnings assets located in prime metropolitan markets on a yield of 4.63 per cent in 2020.
The sale of the 17,005sq m store in Clyde North was the largest Bunnings Warehouse deal in Australia since 2022.
Bunnings assets have been in focus of asset sell offs.
The sale, managed by Colliers’ Tim McIntosh, also showed the healthy demand for core retail investments in top metropolitan Melbourne locations.
The Bunnings is on a 37,780sq m parcel on Berwick-Cranbourne Road and is in one of Australia’s fastest-growing areas. It was sold with a 12-year net lease with options until 2079. The asset generates a net income of about $2.17m and has 372 on-title car spaces.
“The strong level of competitive off-market interest reinforces the current depth of buyer demand for premium retail investments, particularly those underpinned by blue-chip tenants like Bunnings,” Mr McIntosh said.
Schiavello has not commented but it is understood it was drawn by the long-term value of the asset, its strategic location in a major growth area, and its alignment with Wesfarmers’ strong retail fundamentals.
Mr McIntosh said the deal “signals renewed investor appetite for quality retail properties in Melbourne’s growth corridors and reaffirms Bunnings’ position as one of the most sought-after retail investments in the country”.
