Countdown-anchored Properties Sold During Lockdowns

A fully-tenanted neighbourhood retail centre anchored by a Countdown supermarket in Mangere East, Auckland, along with the flagship Countdown Rototuna in Hamilton, have sold in a combined transaction negotiated during the country’s most-recent level three lockdowns.

Owned by Woolworths New Zealand Limited, part of the ASX-listed Woolworths Group and trading under the Countdown brand, the two properties sold to a single investor with an unconditional offer at a combined price of circa-$67 million.

With new 10-year leases to Countdown, and a net combined rental income of $2,798,868 across the two properties – including the multiple retail tenancies at the Mangere East property – the sale represented a 4.19 percent yield and was brokered by Bayleys.

Located on the major arterial Massey Road, the Mangere East neighbourhood centre – where 89 percent of the overall property’s base income comes from essential service occupiers – spans a 1.47-hectare site and offers 5,263sqm of lettable area.

The centre comprises of modern, purpose-built buildings housing the Countdown supermarket plus healthcare businesses, along with a retail strip occupied by KFC and other retail tenants, where there is identified scope for redevelopment and add-value.

At the northern end of Hamilton in the city’s prime growth cell, the A-grade standalone Countdown Rototuna, which opened in May 2020, sits on a central 1.25-hectare site in the master-planned Rototuna Village and demonstrates the latest in supermarket design, fitout, sustainability and technology initiatives.

Ryan Johnson, Bayleys national director commercial, said demand for sizeable defensive commercial property assets underscored by non-discretionary tenant occupiers is particularly strong, as the country’s economic recovery in the face of ongoing pandemic dynamics continues.

“While it is undeniably a changing landscape, there’s currently still fiscal stimulus in the economy, there’s the weight of cheap money in the still-low interest rate environment and there are reassuring global indices in the commercial sector giving capital in this country the confidence to transact,” he said.

“With the cost of debt rising, quantitative easing tapering off and the major trading banks starting to raise lending rates, the sale was timely.”

Pete Gorton, associate director retail sales and leasing for Bayleys Auckland Central, said the timing of the sale took advantage of market conditions, which are now starting to change.

“The transaction leveraged off the existing strong relationships Bayleys has with ultra-high-net-worth (UHNW) clients and our transaction track record with Woolworths NZ Ltd.”

Since January 2020, and including this latest portfolio sale, Bayleys has concluded circa-$300 million worth of transactions for Countdown-tenanted property around the country.

“Bayleys’ commercial team is hugely active in this segment of the market, and confidently navigated the portfolio sale with the benefit of access to active buyers, acute awareness around pricing in this sector and an ability to leverage capability across multiple business lines,” said Johnson.

“Investors of all profiles – from private individuals to syndications, listed entities and intergenerational family trusts – appear to be revising investment strategies to focus on defensive asset classes including supermarkets, healthcare and large format retail.”

Additionally, Bayleys is seeing exceedingly strong interest in commercial assets located within identified growth areas and Mangere East and Rototuna both have strong underlying demographic and geographic catchment credentials.

Brad Ross, broker capital markets team said the Mangere neighbourhood retail centre is the focal point of the Mangere East community.

“That catchment is forecast to grow 16.9 per cent by 2028, reflective of the significant redevelopment activity ongoing within the broader area.”

Meanwhile, as Hamilton continues to grow towards Auckland, the Rototuna property within the mixed-use Rototuna Village precinct represents a best-in-class asset with premium tenant covenant, sound returns and underpinned by Golden Triangle economic fundamentals.

“Rototuna has been prioritised for infrastructure investment to significantly enhance connectivity and growth for the area which is seeing rapid uptake of new commercial and residential opportunities supported by a high level of community amenity,” said David Cashmore, director Bayleys Waikato commercial .

Woolworths New Zealand Limited is New Zealand’s largest supermarket operator and one of New Zealand’s largest organisations, employing over 20,000 Kiwis.

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