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Coles divests three WA assets for combined $45 million

Western Australia’s commercial property market is rising on the radar of investors, with first time purchasers into the state snapping up three Coles retail assets for a combined price of more than $45 million.

The sale of three regional properties – comprising two freestanding supermarkets – Coles Orana and Coles Vasse, and the Coles Express Vasse service station attracted close to 400 enquiries, with strong interest from local WA investors, offshore Asian investors and east coast buyers. All three properties sold at record yields for WA regional retail assets.

Coles Vasse was purchased by a Chinese family for $19.6 million – reflecting a yield of 5.67%. Located at the Margaret River/Dunsborough intersection, the 3,754m2 supermarket includes a 200m2 Liquorland and parking for 185 vehicles. The transaction marks the buyer’s first foray into the WA market.

Coles Express Vasse, situated nearby Coles Vasse, is a brand-new petrol station consisting of a 142m2 convenience store on a 2,111m2 site. A Victorian-based doctor making their first WA investment purchased the property for $2.72 million – reflecting a yield of 6.22%.

The third asset, Coles Orana in Albany, was acquired by a Queensland-based developer for $22.8 million (5.66% yield). Prominently positioned on Albany Highway, the full line supermarket spans 4,051m2 and includes a Liquorland store. The property is underpinned by a 2.9ha landholding and offers future development potential with approval for 658m2 of specialty retail.

Cash said the wide-ranging buyer interest highlighted the strengthening appeal of WA’s property sector amid the state’s rebounding economy.

“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,” Cash said.

“As evidenced by the sale of these three properties, 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.”

The supermarkets, both recently built, were offered with brand new 15-year leases to Coles, while Coles Express Vasse was sold with a 10-year lease.

CBRE’s Anthony Del Borrello said freestanding supermarkets remained among the most sought-after retail investments

“Brand new assets of this nature, with long-term leases and situated in growing catchments, are considered generational investments – typically held for more than 30 years,” Borrello said.

“We expect to see yields for A-Grade supermarkets and neighbourhood shopping centres continuing to strengthen throughout 2019, fueled 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 locations and fixed annual rent increases.”

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