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Bunnings Warehouse generates competitive bidding via pent-up investor demand.

Bunnings Munno Para Hero

Cromwell has divested their Bunnings Warehouse, located in the booming northern corridor of Adelaide. The asset was acquired by Charter Hall for $48.8 million, reflecting a yield of 4.25% which set a new benchmark for South Australian Bunnings Warehouse investments. Colliers’ James Wilson, Chris Maher and Alistair Mackie negotiated the sale via a public EOI campaign. Bunnings Warehouse Munno Para West is the first metropolitan located Bunnings Warehouse to be publicly marketed since 2019.

“Bunnings Warehouse investments continue to be one of the most hotly contested retail investments under the current market conditions. Established funds and private investors are facing growing competition from emerging groups targeting the attractive Bunnings Warehouse net lease covenant, as highlighted by the competitive bidding received for the Bunnings Warehouse Munno Para West campaign. Colliers have announced over $230 million in value of Bunnings Warehouse transactions nationally already in 2021, with all metropolitan and non-metropolitan transactions reporting core cap rates below 5%”, said James Wilson, National Director (NSW) of Colliers Retail Investment Services.

Despite Bunnings Warehouse Munno Para West being marketed and executed under lockdown conditions across multiple states, the strong result was achieved as both private investors and funds continue to focus on hardware investments with a strong covenant, given their defensive and ‘essential services’ nature. Colliers are engaging with a growing number of investors targeting well located investments.

“We are experiencing unprecedented demand from investors seeking to deploy capital into ‘pandemic-proof’ assets with strong underlying land value, long term income growth and covenant security. Bunnings Warehouse Munno Para West is a prime example of such an asset and thus the exceptional investor engagement throughout the campaign. The growing demand of institutional and private capital targeting this asset class resulted in competitive bidding and ultimately an offer secured ‘on contract’ having due diligence completed prior to the close of the EOI, and all during lockdown conditions,” said Chris Maher, Director (QLD) of Retail Investment Services at Colliers.

Single-tenanted Large Format Retail (LFR) assets, in particular Hardware, are in strong demand as evidenced through the heightened activity in this sub-sector. In the 2021 year to date, there have been 11 Bunnings Warehouses transacted which is already as much as the entire 2020 period.

The average yield for the Bunnings Warehouses transacted year to date is 4.55%, excluding the subject asset which transacted well below, recording a sharp 4.25% yield. Freestanding hardware asset average yields, 2021 year to date have compressed by 23 bps on the prior year, with LFR assets showing the strongest tightening across all retail sub-classes with average yields dropping by 117 bps.

This prized asset comprises a modern 16,936 sqm Bunnings Warehouse on a prominent 41,060 sqm corner site, strategically positioned in the booming urban growth corridor of Adelaide, approximately 38 kilometres north of Adelaide CBD.

“Bunnings Warehouse Munno Para West is the largest freestanding retail investment to be publicly marketed in South Australia for some time. This market-leading Bunnings Warehouse covenant, combined with its strategic location within Adelaide’s booming northern growth corridor, generated unprecedented purchaser engagement. The campaign highlighted the significant amount of unsatisfied local high net worth investor and fund capital looking to be placed into the local South Australian market”, said Alistair Mackie, National Director of South Australian Investment Services at Colliers.

Colliers’ James Wilson and Alex James-Elliott have recently launched Bunnings Warehouse Kempsey for sale via EOI. This brand-new Bunnings Warehouse investment is located on the NSW mid-north coast, and is being sold via a fund-through structure.


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Chris Maher

Director | Retail Investment Services

Brisbane CBD

Chris Maher, Director (QLD) within the Retail Investment Services, has bought & sold over A$4b worth of real estate. More than half of these transactions were within the retail sector for ASX listed companies such as Challenger & Vicinity Centres as well as Global IM and Nuveen.

Chris’ expertise ranges from smaller non-discretionary shopping centres (Terrace Central) to large Regional Shopping Centres with mixed-use potential (Bankstown Central).

Chris has also structured close to A$1b of Forward Funding deals across the living and office sectors.

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James Wilson

National Director, NSW | Retail Investment Services

Sydney CBD

James leads the NSW Retail Investment Services team, and coordinates a national strategy for his clients, having transacted over $2 billion worth of shopping centres since joining Colliers International in 2013. James specialise in transacting supermarkets, hardware, neighbourhood, sub-regional and large format retail shopping centres. James utilises his 15 years of retail investment, neighbourhood shopping centre development and agency experience.

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Alistair Mackie

National Director | Capital Markets & Investment Services

Adelaide

Alistair is a National Director in both the Investment Services & Capital Markets teams at Colliers International Adelaide. Alistair is a longstanding member of the team, having worked for Colliers International for over thirty one years.
Alistair has a wealth of experience and market knowledge focussing specifically on the Adelaide CBD and metro markets. He has extensive client relationships with active local, national and international investors.
Alistair's specialties include all forms of commercial investments, particularly in high-value CBD office towers, retail assets (in particular Rundle Mall retail, where he has sold in excess of 25 individual assets within Rundle Mall), and development sites.
As a senior operator, Alistair has developed strategic understanding of complex transactions, national client knowledge and local market conditions advantaging investors.

 

 

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