COLES CLAYTON SELLS FOR $17 MILLION ON RECORD YIELD OF 2.57 PER CENT

A Coles supermarket in Melbourne’s south-east was scooped up for $17,115,000 – selling for a record yield for supermarkets of 2.57 per cent.

The deceased estate, at 1389-1391 Centre Road, Clayton, which sold before its scheduled auction this week, had had a price guide in the sub-$10 million range.

Coles Clayton, occupying a 2883-square-metre site, had been held in the same family for 23 years. Domain Group records show the property was purchased in 1995 for $3.15 million.

It earns an estimated net annual income of $440,552.

The previous record yield was held by the $32 million sale of Woolworths Middle Brighton, which sold on a 3.8 per cent yield in mid 2016. And Dan Murphy’s Alphington, leased to the liquor chain’s owner Woolworths, sold for $22.5 million on a yield of 3.2 per cent in September 2017.

The sale, which is the first Victorian supermarket to sell in 2018, comes as Coles’ owner Wesfarmers announced last week it would spin off the supermarket chain into an independent company, with the demerger expected to complete before 2019.

CBRE national director Mark Wizel, who negotiated the sale along with his colleagues Justin Dowers, Kevin Tong and Dylan Kilner, said the record yield suggested that buyers were turning to metropolitan retail properties with “long-term opportunities”.

While the vendors had intended to take the property to auction, the offer – some $7 million above the guide – was too attractive to turn down, Mr Wizel said.

The buyer is a local private investor, who faced competition from other high-profile investors, some based in Asia, and developers.

“Although there was over 15 years of tenure to Coles, the buyer took a longer term view on the opportunity of owning a prominent Commercial 1 zoned allotment within metropolitan Melbourne,” he said.

Mr Dowers said investors were flocking to safe haven retail investments like Australian – and specifically Victorian – supermarkets.

“Investors are still taking a long term view on the retail sector with operators like Coles and Woolworths having established an exceptional track record of performance,” he said.

“Freestanding metropolitan supermarkets with attributes like a net lease structure, a consistent track record of trading in excess of turnover threshold and a blue-chip tenant present compelling investment credentials.”