Bunnings sells unbuilt South Kempsey store

Bunnings recently sold a 1.38 hectare block abutting its Mill Park outlet.

Bunnings has sold its unbuilt South Kempsey store to a Lowe Group managed syndicate on a funds through basis.

Bunnings Glenorchy traded for a price reflecting a 3.12 per cent yield in 2019.

The $28.55 million deal reflects a 4.19 per cent yield.

On 2.983 hectares at 320 Macleay Valley Highway, on the south west corner of South Street, the 10,999 square metre warehouse will replace the Kempsey Rose Motor Inn.

Bunnings offered the property with a 10 year leaseback starting in about nine months, when the outlet opens.

The vendor has put construction costs at c$12.5m.

In mid-2019, a Sydney investor paid $5.17m for the retailer’s outgoing Kempsey store – on 6947 sqm at 123 Smith St, backing on the Macleay River.

The region is about 420 kilometres north of Sydney, between Port Macquarie and Nambucca Heads.

Earlier this year we reported Bunnings banked c$7m for a 1.38ha block abutting its Mill Park store, in Melbourne’s north.

Another sub five per cent yield

Colliers’ James Wilson, who marketed the South Kempsey asset with Alex James-Elliott, said 11 freestanding Bunnings warehouses have sold this year – all up for $412m.

“We are engaging with demand from investors seeking to deploy capital into assets with strong covenant security,” Mr Wilson said (story continues below).

“The Bunnings Kempsey benchmark result reflects the growing demand of institutional and private capital targeting this asset class,” he added.

The deal comes a month since Charter Hall paid Cromwell Funds Management $48.8m – a price reflecting a 4.25pc return – for the retailer’s Manno Para West outlet, in Adelaide.

In June, De Luca Corporation offloaded a new store leased to the group, at Plainland, in Brisbane, for $22.2m – a 4.21pc yield.

Not long earlier, a Bunnings at Young, 150 km north west of Canberra, traded for $11m – a 4.95pc return.

Also this year, Newmark Capital outlaid $75m for the retailer’s Eastgardens outlet, in Sydney.

That price reflected a 4.15pc yield.

The lowest return for a Bunnings store – 3.12pc – was achieved in 2018 when a Glenorchy, Tasmania, investment exchanged for $14.06m.

“Our investors are incredibly excited to be acquiring Bunnings…Kempsey as it complements our growing portfolio across Australia’s eastern seaboard,” The Lowe Group director Derek Lowe said.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.