Investors continue to seek bricks-and-mortar assets leased to essential services tenants, with Fitzroys selling circa $15 million worth of supermarkets in just a few weeks.
Fitzroys’ Chris Kombi and Ervin Niyaz have just sold the strata titled ALDI supermarket in Gladstone Park Shopping Centre on a 6% yield.
That comes as Chris James and Tom Fisher have sold the Albert Park Village home of independent supermarket Gum Tree Good Food, at 87-89 Dundas Place, for $4.9 million, on a high building rate of $14,000 per sqm.
They have also just sold the Gum Tree Good Food premises at 422 New Street, Brighton on a 5.2% net yield, in an off-market deal.
Gum Tree has long seven-year leases over both supermarkets.
The newly negotiated deals bring Fitzroys’ tally of supermarket asset sales across a range of market segments in the past nine months to circa $83 million. Those include the $17.5 million sale of the brand-new Coles at 263 Normanby Road in the Fishermans Bend precinct, and the sale of Coles-anchored Torquay Village.
“Investors are seeking surety and so are turning to defensive bricks-and-mortar assets secured with leases to essential services tenants, which have proven their resilience through the turbulence of the past few years. Supermarket assets have retained their status as ‘recession-proof’ and are among the most sought-after in the market,” Kombi said.
“Supermarkets have been tightly held in recent years, with only a small number changing hands annually. They’ve continued to trade on healthy yields on the rare occasion they’ve come up for sale.”
Kombi added, “The buyers considered interest rates to have probably topped out and now is the time to be securing these properties.”
Located within Gladstone Park Shopping Centre, strategically positioned opposite a Woolworths supermarket and BWS and surrounded by over 100 national and local traders, the 1,604sqm ALDI property has a 10-year lease plus options to the global supermarket giant.
“This was a rare opportunity given its price point, as well as offering a strong return and future rental growth prospects, and secure lease to one of the world’s largest and most profitable supermarket chains,” Niyaz said.
He added that the ALDI supermarket has traded well given its location in a densely- populated residential and commercial catchment with further growth prospects.
James said the buyers of the Gum Tree supermarkets liked Gum Tree’s status as a popular specialised independent grocer.
“The Gum Tree supermarkets have traded strongly given their locations within established and affluent catchments. Specialty supermarkets been trading well across Melbourne and investors have recognised their role as essential services within their neighbourhoods.”
James also noted that the ALDI and Gum Tree supermarkets are all strata-titled properties.
“Portfolio investors have historically shied away from strata properties, but in light of the changes to stamp duty with the introduction of the Commercial and Industrial Property Tax investors are now open to this segment of the market.
“Strata-titled properties present the chance to an investor to maximise the yield from their asset, offering less exposure to land tax. They also can also offer an easier management proposition as an owners corporation often oversees maintenance and upkeep.”