Long leases feature of Countdown offerings
Located in Huntly and Tokoroa, they still have more than half of their initial 20-year lease terms remaining to one of New Zealand’s largest grocery suppliers.
Countdown is part of Woolworths New Zealand which is owned by Australian publicly listed supermarket giant, Woolworths Limited. Countdown operates a chain of 182 supermarkets nationwide, generating in excess of $6.7 billion of turnover annually.
“A long lease to one of two big players in the retail grocery market is about as good a bottom draw investment as you can get in the commercial property market,” says Bayleys’ senior broker Mike Houlker.
“These two properties represent quintessential defensive real estate offerings with the supermarket sector amongst the most resilient of property investment classes. Because of the non-discretionary, essential nature of grocery shopping, supermarket retail spending generally exhibits low volatility and steady sales figures through different economic or market conditions. This has certainly been reinforced by the sector’s continuing strong performance through various Covid 19 lockdown levels.”
Featured in Bayleys’ final Total Property portfolio for the year, the land and buildings of the two supermarkets are being offered for sale individually by tender, closing Thursday December 9, unless sold prior.
One is the only supermarket in Huntly, the largest town between Auckland and Hamilton, which services not only the township but surrounding rural areas in all directions, says Houlker. He is marketing the property with Bayleys Auckland colleague Sunil Bhana and Bayleys Waikato’s Alex Ten Hove.
The 3,964sqm building (including canopies) is located on a high profile 9,764sqm site at 16-18 Tumate Mahuta Drive. It also has frontage to the Great Thermal Highway (formerly State Highway One) which is the main arterial road through Huntly. The single-level building covers approximately 33 percent of the site with the balance providing extensive customer car parking.
The property has just over 10 years to run on its initial 20-year lease with rights of renewal totalling 40 years which would take Countdown’s occupation through until December 2071 if exercised. The property is currently returning net annual rental income of $671,024 plus GST.
The Tokoroa offering encompasses a 2,788sqm supermarket on a prominent 10,532sqm freehold site at 12-20 O’Sullivan Drive. Purpose built for Countdown in 2011, it has just over 11 years to run on its lease with rights of renewal until 2071.
It too is located in a high-profile position, just off State Highway One in the heart of central Tokoroa’s retail precinct. This offering, returning $636,431 net plus GST per annum, is being marketed by Mike Houlker, Sunil Bhana and Willem Brown of Bayleys Waikato.
Over the past three years Bayleys has been involved in eight sales totalling $280 million where Countdown has either been the sole tenant or an anchor tenant in a shopping centre.
Two non metropolitan transactions, concluded in August last year, were Countdown’s Orewa store which sold for $26.57 million at a 4.7% yield and the Countdown Aotea in Porirua which was purchased for $17.83 million at a 5.4% yield.
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