- The supermarket, located in a town 520km northwest of sydney, was sold off-market
- Whistle Funds Management sold the asset to an undisclosed buyer
- Follows a similar Savills sale, a Woolworths supermarket in Wagga Wagga for $20m
Private investors’ love affair with standalone supermarkets in regional areas shows no sign of faltering with yet another major transaction.
The Woolworths supermarket in Narrabiri, a town about 520 kilometres northwest of Sydney, was sold off-market to the tune of $16.5 million. The deal represented a yield of 4.4%, a very tight yield for regional NSW, and a sale rate of near $5,900 per sqm.
Peter Tyson said the targeted off-market process had generated offers from various bidders, with savvy private investors dominating.
“The most active buyer profile of the increasingly popular freestanding supermarket asset class has long been the agile private investor fraternity,” he said.
“Typically, these assets are tightly held and thinly traded, favoured by investors for the “bond-style annuity” characteristics underwritten by genuine long term lease commitments and high quality tenant covenants such as Woolworths and Coles.”
Peter Tyson, Savills
The 2,800 sqm standalone supermarket was originally developed in 2005 and has a remaining lease term of sale of 8.7 years with two 10 year options. There is onsite parking for 83 cars and the land area totals 6,160 sqm.
Jon Tyson added “The ownership profile of many standalone supermarkets nationally is dominated by high-net-worth private investors, typically domiciled in Melbourne and Sydney.
“Many of these groups own multiple supermarket holdings. The successful buyer of Narrabri was Melbourne based.
“Supermarket retailers invariably seek to secure long term leasing rights which, including options terms, can run for 50-60 years.
“These long-term commitments by essential service providers are amongst the longest lived leases in the marketplace.”
Jon Tyson, Savills
Narribri is known as the administration centre of the second richest agricultural region in Australia, which is underpinned by major cotton, wheat, lamb and beef trade.
The deal follows similar off-sale freestanding regional sales. Savills facilitated the sale of Woolworths in Wagga Wagga for $20 million to Adelaide-based Parkstone Funds Management, on behalf of a private investor.