Hardware giant Bunnings has sold four newly-built stores to CBRE Global Investors in a $180 million transaction that recalibrates values in the sought-after sector.
The Wesfarmers-owned hardware chain struck a deal on a low 5 per cent blended-yield to offload stores in Windsor Gardens in Adelaide, the Auckland suburb of New Lynn and the Sydney suburbs of Caringbah and Bonnyrigg.
Two of the properties, Caringbah and Windsor Gardens, are under construction and yet to open, while all four sold with 12-year leases in place to Bunnings.
CBRE Global Investors is understood to be seeding a new n Unit Trust with the properties which will be underpinned by offshore institutional investors.
Bunnings’ general property manager Andrew Marks said the sale was consistent with the group’s long-term strategy of diversifying its investor base and recycling capital on lease terms that provide it operational flexibility.
“We are pleased to have completed another successful sale at a yield that is reflective of the market and on lease terms that take into account our operational objectives,” he said.
The assets are the second Bunnings-leased portfolio to change hands in as many months as institutions lineup to take a bite of the sector attracted by long leases and stable income.
Property fund Charter Hall finalised an $187 million off-market transaction last month which saw it take control of six former Masters stores that had been re-leased to Bunnings on new 12-year terms.
The assets were secured for the platform’s Long WALE Hardware Partnership fund and followed another $21 million purchase in September of a Bunnings Warehouse in Burnie, Tasmania which was used to seed the group’s Direct Diversified Consumer Staples Fund.
JLL’s Stuart McCann, who handled the most recent Bunnings transaction, said their sale to CBRE Global Investors underscored the amount of offshore capital targeting n real estate.
“This year alone, our platform has received over $25 billion of offers, of which more than $15 billion .. has been from offshore,” he said.
CBRE Global Investors director Chris Johnston said the group intended to work with Bunnings on future transactions for similar assets.
“This portfolio provides exposure to a strong credit tenant who is a leading retailer in the home improvement market with quality assets and attractive lease terms,” he said.
The sale suggests yields in the popular asset class have consolidated at around 5 per cent.
A Bunnings in Auckland’s Grey Lynn sold in September on a 4.9 per cent yield for $37.77 million with a 12-year lease.
Earlier this year in Newstead in Queensland another large-format warehouse with the same lease term sold on a yield of 5.15 per cent, fetching $62.9 million.
A Bunnings Warehouse with a new 12-year lease in Osborne Park set the sector’s benchmark in June last year when it sold to a Perth investor for $7.05 million on a 4.65 per cent yield, the sharpest return so far.