Woolworths to sell $300m shopping centre portfolio to Asian investment group

Woolworths is looking to sell off $300m worth of supermarkets. Picture: NewsWire/ Gaye Gerard

Supermarket giant Woolworths is looking to capitalise on the resurgence of interest in shopping centres with a deal to sell off a $300m portfolio to an Asian investment group close to being struck.

Woolworths is selling up to eight properties, comprising both newly opened and under development centres along the eastern seaboards, to an entity linked to property heavyweight the Shayher Group, which is backed by the family of Taiwanese billionaires, continuing the march of Asian investment into the sector that is driving property prices higher.

The Asian investment group, Forest Endeavour, has been separately looking to expand both its retail and hospitality holdings in Queensland and has lined up the $370m purchase of the Paradise Centre and the Novotel hotel in Surfers Paradise.

The sell-off is in line with Woolworths’ property strategy, with its Fabcot operation scouring Australia for new sites to open as it competes with rivals Coles and Aldi. It has been developing sites itself – partly as smaller developers had found it tough to make them stack up amid rising costs and interest rates – but is still keen to sell them off to long-term owners once it has secured its position.

The supermarket company is moving as retail property has swung firmly back into favour and the overall yield on the transaction – a measure of property value – is believed to be close to 5 per cent. The high price being paid effectively puts the portfolio out of reach of listed groups that also own shopping centres.

A Woolworths spokesman said the company “has been operating and developing new stores and retail centres for over 100 years right across the country”.

“As part of the standard operating rhythm, sites are developed and sold with Woolworths leases in place. We are currently reviewing which assets we will take to market over the next 12 months,” he said.

While the group has declined to comment on the portfolio move, it is one of the more active players in the market. It is vying for existing sites with Coles and is also proposing apartment developments above and around its sites in prime suburbs in Sydney and Melbourne. Selling off the income-producing sites and gaining funding for some that it has underway will give it further firepower to expand its operations.

The supermarkets are slugging it out over shelf prices amid the threat of legal action for price gouging under new laws, with real estate a key part of their strategies. Coles has been outselling its bigger rival at the fastest pace in nearly 20 years and is on track to extend that momentum into this year. But Woolworths has been more active on the property front.

Woolworths last year snapped up a centre in the southwest Sydney suburb of Earlwood that is still occupied by Coles in a $41m deal. It will take control of the supermarket when the Coles lease runs out.

The supermarket giants have also traded tenancies. In 2023, Woolworths snapped up a major complex at The Entrance on NSW’s Central Coast that is anchored by a Coles store in a $51m move. In late 2022, Woolworths also pounced on a mall in Sydney’s Sutherland Shire where Coles is the main tenant in a $68m play. More than a decade ago Coles snatched a key site in Sydney’s Neutral Bay from Woolworths.