The Keysborough South shopping centre is anchored by a Woolworths supermarket. Photo: Supplied

Woolworths to offload four shopping centres for $130m

Larry Schlesinger and Ingrid Fuary-Wagner|Feb 11, 2020

Supermarket giant Woolworths has kicked off a $130 million sell-down from its retail property portfolio with the offering of four investment assets in NSW, Victoria and the Northern Territory.

The four properties are all anchored by Woolworths supermarkets on long leases.

“While the property market remains strong and appetite from financial investors continues, we have the opportunity to sell four strong performing quality neighbourhood shopping centres. These centres will be marketed individually,” said a spokeswoman for Woolworths.

“We have entered into sale and leaseback agreements that will retain the tenure of these properties through strong 10-year leases,” she added.

In Victoria, Woolworths is selling the newly built Keysborough South Shopping Centre in Melbourne’s south-east.

Alongside a Woolworths supermarket, the centre includes eight specialty shops and is currently fully leased, bringing in an estimated net income of $1.78 million.

CBRE’s Justin Dowers, Mark Wizel and Kevin Tong are the exclusive agents.

In NSW, Woolworths is selling the Spring Farm Shopping Centre near Campbelltown, about 60 kilometres south-west of Sydney, and the Woolworths Wadalba on the NSW Central Coast.

The Spring Farm asset includes a Woolworths, BWS and 10 specialty shops, while the Woolworths Wadalba includes a Woolworths, BWS and a cafe.

James Wilson and Alex James-Elliott from Colliers International have been appointed to market these two assets.

In the Northern Territory, Jacob Swan and Nick Willis from JLL have been appointed to sell the Bakewell Shopping Centre in the inner suburbs of Palmerston North, about 25 kilometres south-east of Darwin.

The neighbourhood centre includes a 4800sq m Woolworths and BWS liquor store, 12 specialty retailers and a 287-space car park.

Divestment trend

Both Woolworths and its main rival Coles have been divesting their assets in recent years, offering them for purchase with long-term leases in place.

While both have their own development arms, neither has a long-term property investment philosophy comparable to that of rival Aldi or fast-food giant McDonald’s.

“Our key driver for development is to create great long-term retail and community outcomes for our supermarket-based developments rather than one-off development profits,” Woolworths director of property Ralph Kemmler told The Australian Financial Review last year.

The offering of the four shopping centres and supermarkets comes after Woolworths sold its Mandurah Greenfields Shopping Centre in WA to fund manager Primewest for $32 million last year on a yield of 5.7 per cent.

Coles has divested about $300 million of neighbourhood shopping centres in the past two years.

Recent sales include the Coles Amaroo Village in Canberra, which sold for $29.5 million in November to a private interstate investor on a 6.25 per cent yield.