JLL seals $19.05 million sale of Coles Yarrabilba in Queensland

Investor demand for single tenanted assets highlights increased confidence

July 25, 2019

JLL’s Jacob Swan and Sam Hatcher have sold Coles Yarrabilba for $19.05 million to a private investor, on behalf of Coles Group Property Developments.

The sale reflects a 5.44 per cent passing yield at a rate of $5,394 per square metre.

Located 40km south of the Brisbane CBD, Coles Yarrabilba is a brand new, freestanding full-line Coles supermarket, secured by a highly sought-after net lease on a 15-year term, with options until 2074.

The 16,730sqm site has a gross lettable area of 3,532sqm and has been occupied by the supermarket chain since 2017.

JLL National Director Jacob Swan said: “Retail assets with long-term leases are highly desirable in the current environment given their ability to deliver stable returns through cycles.

“The security of cash flow is also a major driver for investors – underpinned in this instance by Coles supermarkets.

“Potential risks in the retail sector are heavily skewed towards specialty store performance. However, assets with long leases to national or ASX-listed retailers are still being aggressively sought by the market. The downward shift in long-term interest rates so far this year further underpins demand for these (bond-style) real estate assets.”

Fellow JLL Director Sam Hatcher said investor demand for single tenanted assets this year has highlighted the increased confidence in the Australian market, with stability returning following the Federal election and a greater availability of funds as a result of loosening credit restrictions and the RBA interest rate cut.

“With the cost and availability of debt improving, we are seeing exceptional returns on leveraged retail investments backed by strong lease covenants and long leases,” Mr Hatcher said.

The property is located at the gateway of the Yarrabilba master planned community, which is soon to be home to almost 50,000 residents. Yarrabilba is only a short drive from Beenleigh, Browns Plains, Logan Central, only 15-minutes off the Pacific Highway.