CBRE platform nails together Bunnings deal

Wesfarmers-owned Bunnings has sold a portfolio of four properties for more than $180 million to CBRE Global Investors for one of the sharpest yields yet seen for such assets.

The overall yield for the portfolio – covering sites in Sydney, Adelaide and New Zealand – was struck in the low 5 per cent range.

That rate is among the tightest yet, although individual sites have exchanged on sharper yields in the private investor market, where smaller assets can generate strong competition.

The portfolio deal, brokered by JLL, follows the sale of the Bunnings Warehouse Grey Lynn, in Auckland, for a yield of 4.98 per cent earlier this year.

As well, the giant Bunnings Warehouse in the NSW regional city of Bathurst was snapped up on a yield of 5.35 per cent last December.

“We are seeing significant demand from across the whole spectrum of the property market both locally and internationally for Bunnings assets driven by the quality of our sites, the performance of our business and the strength of the Bunnings covenant,” said Bunnings general manager for property, Andrew Marks.

On the buy side, Chris Johnston, director of investment in Australia and New Zealand for CBRE Global Investors, said the investment platform would “welcome the opportunity” for further transactions with Bunnings.

“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.

“This segment of the retail sector is a preferred one, and this transaction is part of a focused programmatic strategy on behalf of our Global Separate Accounts business.”

Two of the Bunnings properties are in Sydney, with one each in Adelaide and Auckland.

Three of the sites were under construction as the transaction was finalised. All the properties have been sold with 12-year initial lease terms.

The transaction was handled by JLL. Stuart Crow, head of JLL’s Asia Pacific capital markets team, said both Bunnings and the CBRE platform would look to build on the portfolio.

Bunnings assets have become highly sought after both in the private investor market and by institutional investors.

In March last year, Bunnings sold a new Bunnings Warehouse at Joondalup in Perth for more than $43.5 million to a private Victorian investor on a yield of 5.5 per cent.

Charter Hall has been a big player in the market too. In September, it bought a Bunnings Warehouse in Burnie, Tasmania, for $21 million on a 6.1 per cent yield.

That property is one of the seed assets for a new consumer staples fund that Charter Hall launched this month.

And in a major deal last month Charter Hall bought a $187 million portfolio of ex-Masters stores occupied by Bunnings from Home Consortium for one of its unlisted wholesale funds.

Commenting on that transaction, Charter Hall’s David Harrison pointed to the resilience of hardware as a retail category.

“If you look over the last 20 years hardware has had the best price inflation of any retail category,” he said.

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