CBRE’s final Premium Property Portfolio Auction (PPPA) event for the year will feature the sale of five properties comprising three supermarkets, a 7-Eleven store and a new KFC store in Queensland.

The investment properties, to be auctioned in October, have lease terms ranging from seven to 20 years and income ranging from $182,500 to $761,000 per annum net.

CBRE Director Investments, Mark Wizel who is managing the auction process with Joseph Du Rieu and Justin Dowers, said the five properties represented the best that have been put to market in the PPPA series this year.

At a glance:

• The sale of three supermarkets, one KFC store and a 7-Eleven represent best investment opportunities in Premium Property Portfolio this year says CBRE
• The auction will be held at Zagame Automotive, Swan Street Richmond, on Thursday October 10 at 6pm
• Strong international interest expected given the low Australian dollar while tight food and beverage market likely to drive domestic interest

 “Supermarkets are without doubt the most sought-after sub $30 million investment category in the market today and the compelling list of investment credentials make it very clear why that is the case,” Wizel said.

“`First of all they offer 100 per cent non-discretionary spend tenants, the tenants are national and international blue chip companies, the lease terms are invariably long-term, and they are predominantly located in town centres with enormous value add/development potential down the track.

“These are the sort of attributes that investors have at the top of their list, especially in what you might call challenging economic times and in view of their reputation as a true defensive investment.

The five properties to be put to auction next months are:

• Aldi supermarket in Seville, Victoria, which comes with a 10-year lease and income of $485,000 per annum
• 7-Eleven in Armstrong Creek, Victoria, which has a lease term of 15 years and income of $310,00 per annum
• KFC store in Bundaberg East, Queensland, with a 15-year lease and income of $182,530 per annum
• Woolworths in Abbotsford, Victoria, with a lease term of seven years and income of $231,000 per annum
• Woolworths in Leongatha, Gippsland, Victoria, with a lease term of 20 years and income of $761,00 per annum

Mr Wizel said he expected particularly strong interest in the five properties given that owners were generally holding tight to their food and beverage sector assets.

He said there was currently a high level of pent-up buyer demand for similar premium properties because owners had been reluctant to sell while there was a dearth of attractive options for reinvestment.

“In the first nine months of 2019, for example, we have seen only two standalone supermarkets sold in Victoria, whereas in the same period in 2018 there were seven sales,” Wizel said.

“The pent-up demand has also been swelled by the availability of record low investment borrowing rates along with the lack of opportunities over the first half of 2019.”

According to CBRE, recent standalone supermarket sales from last year and earlier this year show a steadily increasing yield from 2.68 per cent in March last year when a Coles in Clayton sold for $17.1 million up to 6.34 per cent for a Coles in Lalor Plaza which sold for $7.38 million in June 2019.

Joseph Du Rieu said he expected a strong response from local and interstate investors while the properties were also likely to attract off-shore interest due to the lower value of the Australian dollar.

“Off-shore investors have shown a greater degree of interest in retail assets of late and the fact that the Australian dollar is now at a point which provides those off-shore investors, or those sourcing their funds from off-shore, with an effective discount provides an additional level of incentive,” he said.

The premium action will be held at Zagame Automotive, Swan Street, Richmond, on Thursday October 10 at 6pm.

According to CBRE, since its inception in August 2017, the PPPA has transacted more than $440 million in premium investments from the sale of 50 properties with a very strong 86 per cent clearance rate and an average yield of 5.43 per cent.

Similar to this:

Foreshore facing retail strip hits the market for the first time in 90 years

Freehold 'with huge potential' for sale in West Melbourne

Australia’s largest educational investment portfolio marketed for sale at more than $150 million