Woolworths to sell $180m supermarket portfolio

Woolworths will seize on investor appetite for regional shopping centres when it offloads a $180 million portfolio of six stores across Australia.

The supermarket giant will sell neighbourhood stores in Victoria, Queensland, Western Australia and the Northern Territory and then lease them back from the new owners as part of a plan to rationalise its assets.

The properties comprise recently completed or partially developed supermarkets at Cornubia in Queensland, Seville and Selandra Rise in Victoria, Dalyellup and Mandurah in Western Australia and the Northern Territory’s Bakewell.

Demand intensifies: Neighbourhood shops in billion-dollar surge

The move comes amid almost unprecedented interest in neighbourhood and sub-regional retail assets this year.

In August realcommercial.com.au reported investors had spent more than $4 billion on local shopping centres in the 12 months to June.

The current market for retail investments is the strongest we have seen for over a decade

Savills research found institutional investors were preying on neighbourhood centres and had accounted for more than two thirds of the deals done in the last financial year.

The Woolworths in Seville, Victoria, is among six to be sold as part of a $180m portfolio

And the trend has continued, with CBRE data showing sales of neighbourhood shopping centres was up 24% in the first three quarters of 2015.

CBRE national director of retail investments Peter Rossi says he expects this portfolio of six stores to be similarly sought after as investors scour the country for assets leased to major retailers.

“The opportunity to purchase assets with an extremely secure and lengthy Woolworths lease term and covenant is expected to draw significant interest in the sale process, particularly in light of the current demand for retail investment opportunities,” Rossi says.

“The current market for retail investments is the strongest we have seen for over a decade,” Rossi says.

All six supermarkets will be sold with a 20-year leaseback to Woolworths. An expressions of interest campaign for the properties closes on November 20.