A Victorian syndicate led by The Lowe Group has acquired a Bunnings Warehouse on the NSW mid-north coast for $28.55 million, reflecting a national non-metro benchmark yield of 4.19%.
Colliers’ James Wilson and Alex James-Elliott marketed Bunnings Warehouse Kempsey via an on-market EOI campaign on behalf of Bunnings. The Bunnings Warehouse investment was sold on a pre-sale investment structure, with the development due for completion in mid-2022.
Derek Lowe commented, “Our investors are incredibly excited to be acquiring Bunnings Warehouse Kempsey as it complements our growing portfolio across Australia’s eastern seaboard".
Bunnings Warehouse investments continue to be one of the most hotly contested retail investments, with growing investor appetite driving core cap rates below 5% for both metropolitan and regionally located Bunnings Warehouses. Over $412 million in freestanding Bunnings Warehouse investments have transacted in 2021 year-to-date, across 11 assets. The strong level of purchaser competition continues to highlight the increased depth of purchasers and pent-up demand for this retail sub-sector.
“We are engaging with demand from investors seeking to deploy capital into assets with strong covenant security. The Bunnings Warehouse Kempsey benchmark result reflects the growing demand of institutional and private capital targeting this asset class,” said James Wilson, National Director (NSW) of Retail Investment Services at Colliers.
Scarcity of premium assets is further highlighted when considering that Bunnings Warehouse Kempsey is only the second publicly marketed NSW Bunnings Warehouse in 2021, after Bunnings Warehouse Young was secured by a Sydney based private investor in June 2021 for $11 million after an on-market campaign by Colliers.
“Colliers has transacted circa $360 million in value of Bunnings Warehouse anchored investments nationally in 2021, including Bunnings Warehouse Eastgardens which set the national record yield of 4.15% when acquired by Newmark Capital. However, the Bunnings Warehouse Kempsey campaign revealed new and emerging private and institutional capital further driving competitive tension”, continues James Wilson.
This asset comprises an approximate 10,999 square metre Bunnings Warehouse on a prominent 29,832 square metre site area, three kilometres south of Kempsey’s CBD on the NSW mid-north coast. The investment featured a new 10-year lease with annual CPI rental reviews capped at 2.5%.
The Bunnings Warehouse Kempsey marketing campaign was prepared, launched and sold throughout NSW lockdown restrictions. The Colliers Retail team were still able to secure interstate capital and achieve a non-metro national record yield for a single tenanted Bunnings Warehouse investment.
“Colliers engaged 135 enquiries during the four-week campaign, with over 30 parties in the data room comprising syndicators, institutional and private investors. The campaign generated incredible interest with multiple parties delivering offers, highlighting the high level of capital targeting Bunnings Warehouse investments,” noted Alex James-Elliott.