A Charter Hall fund has bought a Bunnings warehouse in Nowra on the south coast of New South Wales for $65.3 million, reflecting an initial passing yield of 4%.
The deal takes the number of Bunnings properties across Charter Hall’s portfolios to 66, totalling almost $3.7 billion in gross annual value.
Located at 159 Princes Highway in South Nowra, the near new property offers 17,982 sqm of gross lettable area on a 29,350 sqm.
The property, which was fully occupied on a 12-year net lease, was transformed from a mid-sized format to a full format on the same site last year.
With a 240-metre frontage, the store was the only Bunnings in the trade area and the largest on the NSW south coast.
Charter Hall’s Direct Industrial Fund No.4 purchased the property.
“Bunnings is arguably one of Australia’s most trusted businesses and we are proud to add its Nowra store to the Fund’s long term and resilient tenants,” Charter Hall Direct CEO Steven Bennett said.
“The acquisition of Bunnings Nowra is in line with DIF4’s strategy to invest in quality properties in premium locations with high capital growth potential and long weighted average leases,” Charter Hall Direct Fund Manager Julian Menegazzo said.
“With a WALE of 11-years remaining, and fixed 2.5% annual rent reviews, we’re pleased to welcome Bunnings Nowra to the fund and look forward to enhancing the portfolio’s relationship with an Australian icon.”
Sam Hatcher and Nick Willis from JLL brokered the Bunnings Nowra deal.
“Large format Bunnings stores remain very competitively sought after by majority of buyer types as they are arguably one of the most secure covenants in Australia,” Hatcher said.
“Bunnings Warehouses have been among the most highly sought-after real estate assets since the onset of the pandemic. The long leases appeal to investors seeking a defensive and stable income, particularly given the strength of the Bunnings covenant and underlying business performance.”
“Since the onset of the pandemic, there have been over $1.2 billion of Bunnings transactions, with 12 sales in 2021 totalling $496 million. In 2020, there were eight transactions totalling $701 million,” Willis said.
“This figure is bolstered by the $353.2 million portfolio acquired by Charter Hall Long WALE Hardware Partnership.
“This level of investment activity is being driven by the increasing weight of capital locally and offshore seeking exposure to both Bunnings and Supermarket based assets.
“However, supply is becoming increasingly constrained which is driving compression in the sector.”