The Woolies supermarket in Eltham has changed hands for $35 million as investors swing to retail properties that give them a hedge against inflation.
The full-line supermarket at 7 Arthur Street was the first to sell in this year’s new COVID-normal market and it fetched a sharp 3.3 per cent yield.
The Woolworths in Eltham.Credit:
Woolworths has a new five-year lease on the 3744 square metre outlet and options that take it to 2020.
The property was sold by the Hansen family, founders of ASX-listed Hansen Technologies, through Stonebridge Property Group’s Justin Dowers and Kevin Tong, and Fitzroys’ David Bourke, Chris James and Shawn Luo.
Mr Dowers said it traded on ‘percentage rent’ basis where a portion of business turnover gets paid to the landlord on top of the base rent. If prices and turnover inflate, so does the landlord’s cut.
“We had 15 offers on the property and achieving a yield at this level would indicate that buyers may be anticipating a higher interest rate environment,” he said.
Mr Bourke said supermarket investments, especially those that trade above their percentage rent threshold, are one of the best investment hedges against inflation.
Achieving a yield at this level would indicate that buyers may be anticipating a higher interest rate environment.
Stonebridge Property Group’s Justin Dowers
Several supermarkets sold towards the end of last year achieved similar or tighter yields.
A Woolies in North Balwyn changed hands for $45.7 million on a 2.99 per cent yield. A Coles Local in Glenferrie exchanged for $24.5 million on a 1.9 per cent yield and another Woolies in Blackburn South sold for $29.3 million on a 2.47 per cent yield.
