Coles supermarket sale a Black Swan event
Coles supermarket in Lalor Plaza sold for $7.38 million to an Asian investor. Photo: Supplied

Coles supermarket sale a Black Swan event

The Saristavros family, founders of Black Swan dips, have copped a rare loss on a supermarket investment after selling a Coles in Melbourne’s north for $1 million less then what they paid for three years ago.

The 2050-square-metre strata-titled supermarket, which occupies 40 per cent of Lalor Plaza, on the corner of McKimmies and Darebin roads, sold under the hammer this week for $7.38 million to an Asian investor.

It last sold for $8.3 million in October 2016 when the Saristavros family bought it after selling their food dip business to Filipino food company Monde Nissin Corporation for about $115 million two years prior.

The yield of 6.34 per cent was the highest for a Coles supermarket sold in Victoria in the past 18 months, according to CBRE, and follows a Woolworths and BWS in Lara, Geelong selling for $21.55 million in April on a yield just below 6 per cent.

Capital losses on supermarket investments have been rare in recent years with the asset class highly sought-after by investors given the strength of the lease covenant and the generally more resilient nature of non-discretionary retail.

The relatively short Coles lease term – 4.5 years remaining compared with eight when it sold in 2016 – made the asset less appealing for purely passive investors, said CBRE’s Joseph Du Rieu who marketed the supermarket alongside colleagues Rorey James, Kevin Tong and Justin Dowers and conjunctional agents Alex Ham and Michael Gross of Gross Waddell.

Coles and Woolworths supermarkets are often offered with leases of more than 10 years.

There were three bidders at Wednesday’s onsite auction with the purchaser a domestic investor with Hong Kong heritage, said Mr Tong.

“Over the past 12 months we have noticed increased interest in supermarkets from Asian capital, with our team also transacting the Woolworths in Scoresby and Woolworths in Burwood East to Asian-based investors.”

An IGA in Ringwood East, which sold recently for $7.34 million, was bought by a locally-based Chinese investor,

“We have witnessed increased confidence in buyers seeking single tenanted retail investments since the May federal election, with many taking a more proactive approach to purchasing following the Coalition government’s re-election,” Mr Du Rieu said.

Get a weekly roundup of the latest news from Commercial Real Estate, delivered straight to your inbox!

By signing up, you agree to Domain’s Privacy Policy and Conditions of Use. You may opt out at any time.