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Coles Group to sell trophy Victorian supermarket investment Coles Woodend
Posted by Commercial Ready on Jan 25, 2021

Stonebridge Property Group has been appointed to sell a newly developed Coles in Woodend, a prime supermarket investment secured by a brand new 10-year lease to a dominant Coles supermarket. The property will be sold via an expressions of interest campaign closing Wednesday 3 March.

Coles Woodend is the first supermarket offering in 2021 and investor demand is expected to be extremely strong following only one major supermarket transaction in Victoria in 2020. The major supply/demand imbalance, combined with the positive shift in supermarket fundamentals, stamp duty concessions and the low cost of debt are expected to drive record pricing.

The freestanding, 3,780 square metre Coles supermarket was constructed in 2018 and includes a Liquorland and benefits from a brand new 10-year net lease to Coles Supermarkets Australia Pty Ltd, with additional options and a passing net income of $1.43 million. The asset has potential to deliver rental growth in the short term, with Coles turnover increasing strongly. Convenient at-grade parking is provided for 187 vehicles on an expansive 1.1 hectare high profile town centre landholding.

According to Stonebridge partner, Justin Dowers, who is marketing the property with Kevin Tong and Philip Gartland, Coles has picked the perfect time to offer this trophy asset to the market.

“Standalone supermarkets are extremely rare at present and fundamentals have never been better. Coles Woodend ticks all the boxes; a blue-chip supermarket achieving strong sales growth, a modern building with depreciation benefits, a long 10-year lease and a prime position opposite Woodend train station.” Mr Dowers said.

“Coles Woodend is dominant in its trade area, serving a large Main Trade Area of over 30,000 people and forecast to grow strongly at over 1.6% p.a. to 2031. Woodend is well positioned to benefit from the ‘Tree Change’ trend emerging from COVID, due to its location in a major growth corridor only 1 hour by train to Melbourne CBD.”

Mr Dowers also noted that the property would be sold with a net lease structure to Coles, and with strong prospects of rental growth in the short to medium term.

The only Victorian supermarket sale of 2020, Woolworths Torquay, was struck by Stonebridge in late December at a record yield of 3.65%, indicating that yield compression is highly likely across the supermarket sub-sector in 2021.

“Stonebridge marketed Woolworths Torquay in late 2020 and the market response was unbelievable. We fielded over 165 enquiries and 14 offers, exchanging for $25,100,000 million with no due diligence period. Many of our clients are used to seeing 10-15 supermarket opportunities a year, compared with 1 in 2020. The investor appetite for supermarkets is growing consistently and we think Coles Woodend will be an extremely attractive opportunity for savvy investors seeking highly secure income with growth potential,” added Mr. Tong.

50% stamp duty concession
Mr Tong also commented that prospective purchasers would benefit from a significant 50% reduction in stamp duty for commercial properties purchased across regional Victoria. The State Government concession includes transactions entered into on or after 1 January 2021.

“The long and short of it is, if you buy a commercial property in regional Victoria you get 50% off your stamp duty and that is going to be worth a significant amount of money.”


For further information please contact:
Justin Dowers

Partner - Stonebridge Property Group
Mobile: 0438 098 805
[email protected]

Kevin Tong
Director - Stonebridge Property Group
Mobile: 0422 848 818
[email protected]

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