The strong appeal of a Bunnings Group and Wesfarmers Limited lease covenant continues to attract keen interest from astute property investors, most recently demonstrated with the off-market sale of the purpose-built Bunnings in Wonthaggi at a highly competitive yield of 5.00%. The sale was successfully negotiated by Savills Retail Directors, Rick Silberman and Steve Bolton.

The Bunnings Wonthaggi store, located at 140 McKenzie Street in Wonthaggi, opened its doors in July 2023, marks the first property divestment in Victoria for Bunnings Group since the sale of their Clyde North store in 2019. This prime investment provides a secure 10-year lease, with an attractive net annual rental income, and annual rent reviews linked to CPI, capped at 2.5%.

The property itself is a modern, purpose-built warehouse, featuring an outdoor nursery, timber sales area, and an on-site café, spread across more than 9,000 sqm. Additionally, the site offers a generous 220-space at-grade carpark, all situated on a 2.1-hectare parcel of land. Wonthaggi, located 135 km southeast of Melbourne’s CBD in coastal South Gippsland, is an emerging regional hub, further enhancing the store's appeal as a strategic investment.

Commenting on the sale, Director of Retail Investments at Savills Australia and New Zealand, Rick Silberman said, “Even in today’s economic environment, the resilience of the Bunnings lease covenant remains evident. We continue to see strong demand from private capital, as opportunities of this quality are scarce, particularly in Victoria.

Achieving a 5.00% yield in a regional location like Wonthaggi truly underscores the strength of the Bunnings business model.”

Director of Retail Investments at Savills Australia and New Zealand, Steve Bolton added, “This transaction reinforces the ongoing demand for long-term, secure investment opportunities, especially those tied to iconic Australian brands like Bunnings. It highlights the appeal of properties underpinned by robust lease agreements, regardless of location.”

The sale of Bunnings Wonthaggi underscores the vitality of the retail investment market, especially in regional areas, and continues to demonstrate the confidence investors have in tenants like Bunnings. As regional markets grow in prominence, assets like this one will remain highly sought after for their solid income streams and secure leasing arrangements.

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