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$450m Australian retail portfolio listed for sale

The blue-chip portfolio includes assets across five states

A private syndicate of Australian based investors has listed a high-quality portfolio of 14 core retail assets for sale, with pricing expectations of up to $450 million.

CBRE’s Pacific Head of Retail Capital Markets Simon Rooney has been appointed to steer the portfolio sale, which comprises predominantly long WALE, single tenant assets – six of which are leased to leading home improvement and outdoor products retailer Bunnings.

The sale process follows the recent acquisition by Charter Hall’s Long WALE Hardware Partnership of six Bunnings stores across Australia for $353.2m, at a blended cap rate of 4.63%.

“Having been actively pursued by numerous parties over recent years, the syndicate has decided to formally consider market approaches from a select group of investors via an off-market Expressions of Interest campaign closing in mid-March,” Rooney said.

“The type of assets on offer have been the real standout market performers both during, and as Australia emerges, from the current COVID-19 period and continue to be highly sought after by major institutional owners, offshore capital and high net worth and private investment groups.”

The blue-chip portfolio includes assets across five states, which are primarily single-tenanted and offer long term lease covenants to Wesfarmers, Woolworths and Coles.

The NSW, Victorian, Queensland, Tasmania and South Australian assets offer a WALE of over eight years, attractive rental growth provisions and significant depreciation allowances, with minimal capital expenditure required in the short to medium term.

“The portfolio presents an immediate opportunity for major investors to acquire, institutionalise and immediately grow a high quality, long WALE or convenience/hybrid style retail portfolio, or to significantly add to an existing asset pool,” Rooney said.

“While investors are cautious, they remain opportunity-led, with a clear flight to quality focus and a realistic expectation that deal flow will continue to increase as border restrictions ease.”

Rooney added; “Most activity and demand for retail assets in 2021 is expected to centre around long WALE, primarily single tenanted, low volatility assets which offer transparent in-built returns, underpinned by strong covenants. This is expected to underpin

ongoing interest in strong performing and highly resilient, food, service and grocery anchored assets which have a non-discretionary retail focus.”

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