A local private investor has out-bid a long list of national and international buyers to secure the high-performing Coles supermarket in Phillip Island, Victoria, in a highly competitive Expression of Interest campaign conducted by JLL. The property was secured for $23,750,000 reflecting a sharp 4.6% yield, marking one of the most competitive campaigns seen in years and signals a significant turning point in the market.

The freestanding Coles supermarket, located in the heart of the popular tourist destination of Phillip Island, attracted unprecedented interest from investors nationwide. JLL's Tom Noonan, Stuart Taylor, and MingXuan Li exclusively managed the highly contested Expressions of Interest campaign.

"The aggressive nature of the competition for this asset was truly remarkable," said Tom Noonan, JLL Retail Investments. "We received 387 enquiries and 63 data room participants, culminating in 17 formal Expressions of Interest totaling $340m in bids, with all six shortlisted parties submitting offers via unconditional contracts of sale in the second round. This level of engagement is one of the strongest responses we've seen in recent years."

The deal at a glance: 

• Asset: Coles Anchored Freestanding Supermarket
• Location: Cnr of Church St and Thompson Ave in Cowes, Phillip Island VIC
• Sold Price: $23,750,000
• Yield: 4.66% 
• Total Bidder Capital: $340,400,000

Stuart Taylor added, "The exceptional result can be attributed to the strength of the asset, featuring a rare net lease structure and strong performance of the supermarket with the tenant paying percentage rent. However, the outcome also reflects changing market dynamics, with many private investors of the view that we are in a new, declining debt environment, and the bottom of this real estate cycle may be behind us. "

“The depth of bidding and result achieved in this campaign demonstrates that there is significant pent up demand for high quality assets, and there is real opportunity to achieve premiums in this market if the asset matches certain investment criteria.” Mr Taylor said. 

The sale of Coles Phillip Island represents the sharpest Victorian supermarket transaction since other notable transactions in regional Victoria, including Woolworths Torquay (Dec-2020) and Coles Woodend (Mar-21), which previously set the benchmarks for yields in recent years.

"This transaction represents the sharpest yield for a regionally located supermarket nationally in recent times, "commented Mr. Noonan. "The depth of bidding with over $340 million in total bidder capital shows the depth of investors looking to acquire prime retail assets in the current market, and the final yield achieved are clear indicators of renewed confidence in the market."

The sale of Coles Phillip Island was the highest ever sale recorded on the Island eclipsing the $15.03m paid in November by Adrian Portelli for the Block properties and rounding out nearly $50m of transactions in recent years by the JLL Retail Investments team following the sale of Cowes Shopping Centre and Bass Coast Village. 

“As one of Victoria’s most popular Asian tourist destinations, Coles Phillip Island attracted significant interest from Chinese investors who made up over 30% of bids received” concluded MingXuan Li. "This aligns with the recent resurgence of Chinese tourism to Phillip Island, where Chinese visitors have regained their position as the top international market at attractions like the Penguin Parade."

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