Charter Hall’s love affair with Bunnings continues with $65m buy
Property investment group Charter Hall has paid $65.3 million to add another Bunnings to its collection, buying the hardware retailer’s biggest warehouse on the NSW South Coast.
The acquisition of the Nowra warehouse takes the number of Bunnings across the Charter Hall group to 66, worth almost $3.7 billion.
In an off-market deal announced on Monday, Charter Hall’s Direct Industrial Fund No.4 acquired the Nowra Bunnings on an initial passing yield of 4.0%.
That equalled the record 4% national benchmark yield for a Bunnings warehouse, set in November by New Zealand investor Cook Property’s $58.6 million acquisition of a Bunnings under construction in Queensland’s Hervey Bay.
Charter Hall paid $65.3 million for the Bunnings warehouse in Nowra. Picture: realcommercial.com.au/sold
The near-new, full format warehouse in Nowra was acquired on a net lease of 12 years. It was transformed last year from a mid-sized format on the same site.
Charter Hall Direct CEO Steven Bennett said DIF4’s acquisition of Bunnings Nowra adds to the fund’s growing portfolio of high quality properties with strong tenant covenants.
“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,” Mr Bennett said.
While Charter Hall is a long-time Bunnings investor, assets leased to Bunnings and other ‘pandemic proof’ essential and non-discretionary retailers have become even more highly prized by investors during the pandemic.
Private buyers, syndicates and institutional investors have been increasingly targeting Bunnings assets, attracted to the blue-chip covenant, long lease terms and annual rental review mechanism. Bunnings has also benefited from the surge in spending on new homes, renovations and DIY projects, with large format retail among the strongest performers during COVID-19.
Charter Hall Direct fund manager Julian Menegazzo described Bunnings as an Australian icon.
“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,” Mr Menegazzo said.
“With a WALE [weighted average lease expiry] 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.”
The Nowra Bunnings is situated on a 29,350sqm site with an approximate gross leasable area of 17,982 sqm. It is the only Bunnings in the trade area and the largest on the NSW South Coast, Charter Hall said. The off-market sale was brokered by JLL’s Sam Hatcher.
