Woolworths’ sale cements store as a ‘recession-proof’ retail asset
WOOLWORTHS’ Torquay Central supermarket has underlined the market’s opinion of the asset class as “recession-proof” amid a massive sale.
The 7331sq m property has sold $25.1m in a deal with a Melbourne-based private investor.
The transaction represents a 3.65 per cent yield for the 2980sq m freestanding store (including the adjoining land).
Stonebridge Property Group’s Justin Dowers, Kevin Tong and Philip Gartland negotiated the sale for the private family that developed the supermarket in 2004.
It represents a record yield for a regional Victorian supermarket investment, the agents said.
Mr Dowers had described stand-alone supermarkets as “recession-proof” retail assets when the property was first listed.
“What became clear as soon as the marketing campaign for Woolworths Torquay Central commenced was the sentiment for this type of investment product had heightened, particularly due to an increase in supermarket sales performance further cementing these investments as the ‘go-to’ pandemic-proof investment, similar to that of certain logistics assets,” Mr Dowers said.
During the lockdowns, supermarkets were deemed essential services.
The campaign was launched after Melbourne’s lockdown had lifted and attracted offers from 14 buyers.
Mr Tong said all were from private investors.
“The most aggressive buyers that were identified when the bids were received represented high net worth individuals that were not necessarily common industry players,” Mr Tong said.
“These buyers were individuals that had ongoing business interests outside of property and an increased appetite to shift a growing wealth pool (due to business profits) into a secure investment, like Woolworths Torquay Central.”
The sale also highlighted investors’ heightened interest in regional commercial property, particularly in coastal locations like Torquay.
The emergence of work-from-home and sea-change and tree-change trends that occurred last year due to COVID-19 has seen a drastic increase in population in regional areas.
The State Government also brought forward a 50 per cent stamp duty discount on commercial property investments in regional Victoria, which Mr Dowers said were factors in bringing regional Victorian retail yields closer to those in metropolitan Melbourne.
The freestanding 2980sq m building on Bristol Road includes a BWS store and is let on a 20 year term, expiring late in 2024 plus further options, with a passing net income of $916,029.