Coles offloads three regional stores for $45 million

Written on the 7 February 2019 by Business News Australia

Coles offloads three regional stores for $45 million

International investors have their eyes on regional Western Australian commercial properties according to the results of a sales spree.

CBRE, who managed the expressions of interest campaign for three regional properties, says international and Australian investors are keen to grab a slice of WA.

The three regional properties, with Coles as the major tenant, were sold to different investors to the tune of $45 million.

The sales campaign attracted nearly 400 enquiries according to CBRE, with interest from local WA investors, offshore Asian investors and east coast buyers.

The three properties, Coles Orana, Coles Vasse, and the Coles Express Vasse service station, were sold at record yields for WA regional retail assets.

Coles Vasse was sold for $19 million to a Chinese family. The property, located at the Margaret River, includes a 200sqm Liquorland and parking for 185 vehicles.

A Victorian based first-time investor purchased the Coles Express Vasse a brand new petrol station for $2.72 million.

The final centre, Coles Orana in Albany, was acquired by a Queensland-based developer for $22.8 million

CBRE's Richard Cash says investors are looking to areas like regional WA to invest because their own areas are becoming too dear.

"With demand outstripping supply and driving up prices in many east coast locations, investors being priced out of assets in their own state are looking to capitalise on WA's attractive investment fundamentals," says Cash.

"The high-quality nature of these assets being brand new with long leases to ASX-listed tenants attracted widespread interest that ultimately resulted in record yields."

CBRE's Anthony Del Borrello says supermarkets remain the most in-demand property type. The three properties being brand new certainly helped with the high prices obtained.

"Brand new assets of this nature, with long-term leases and situated in growing catchments, are considered generational investments typically help for more than 30 years," says Del Borrello.

"We expect to see yields for A-Grade supermarkets and neighbouring shopping centres continuing to strengthen throughout 2019, fuelled by an influx of new buyers entering the market locally, nationally and globally."

"Additionally, petrol stations remain a highly-sought asset class for both domestic and offshore investors due to their long leases, high exposure and fixed annual rent increases."

This trend certainly helped buoy the results for SCA Property Group who this week reported a 17.6 per cent year-on-year rise in funds from operations on the back of shopping centre income.

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