Bunnings one to nail for portfolio

The property occupies a high profile 28,661sq m site fronting the Ellerslie Panmure Highway.

The land and buildings comprising a Bunnings Warehouse store in Mt Wellington are being offered for sale on a long-term leaseback basis.

The freehold property at 459 Ellerslie Panmure Highway is being marketed for sale by Jason Seymour of Colliers International's corporate sales team and colleague John Green via a deadline private treaty closing at 4pm Wednesday April 2, unless it sells prior to that date.

Seymour says the sale presents investors with a top quality retail asset occupied by a strong tenant on a new 10-year term, with three further rights of renewal for six years each. "Although there is an earlier break provision in the lease, the minimum certain term is eight years from lease commencement," Seymour says.

The property generates net annual rental income of more than $1.6 million with three yearly rent reviews to market rates. The rent review structure provides for guaranteed minimum rent growth of 6 per cent every three years with a maximum of 10 per cent.

"This property occupies a high-profile 28,661sq m site fronting the Ellerslie Panmure Highway in a prominent Mt Wellington location. It's a very good opportunity to secure an investment with a significant land holding and new lease to a well-known and high-profile tenant," Seymour says.

The 11,327sq m store includes an extensive main retail floor, a mezzanine area, outdoor garden centre, a cafe, hire shop and timber yard, and 272 car parks. It is in a Business 4 zone, providing for a wide range of business activity including commercial and retail sales.

Green says the strength of the brand, the lease and the large land holding are important assets for an investor.

"Bunnings has become one of New Zealand's best-known retail and trade brands, and the location of this particular store is outstanding. It's on the fringe of the Auckland CBD, on a high-profile site accessed by its own signalised intersection on the Ellerslie Panmure Highway. The highway is a major district arterial road which services about 20,000 vehicles per day," Green says.

"Bunnings is an ideal tenant, being very large, well established, and growing with the backing of a major publicly listed parent company. With the combination of the brand-name tenant and prime landholding in the heart of Mt Wellington's bulk retail precinct, this sale represents an excellent opportunity for investors."

Green says big infrastructure developments in the Mt Wellington area, 10km southeast of the Auckland CBD, add to the attractiveness of the store as an investment property.

"An upgrade to the Panmure station was completed in January and further major works are under way at the Panmure Interchange to improve connections and reduce travel times for north and south-bound drivers. Train and bus services are a popular form of transport in the area which services the surrounding suburbs of Tamaki, Panmure, Penrose, Ellerslie and Stonefields.

"Major redevelopment has also taken place along nearby Lunn Avenue in recent years converting the former predominantly industrial area into a vibrant new retail and entertainment precinct in the centre of the new master-planned residential suburb of Stonefields."

Seymour says growing confidence in New Zealand's economic performance is a key factor in the commercial property sector's upbeat outlook.

"This confidence is evident in the retail sector in rising spending per capita. According to Statistics New Zealand, seasonally adjusted Auckland retail sales improved further in 2013, up 5 per cent compared to 2012.

"Bunnings is set to benefit from the strong prospects for employment and wage growth in Auckland, rising house prices and the positive consumer indicators," Seymour says.

"Investors are showing a preference for prime retail, particularly the strong performers such as Bunnings that are in a profitable growth mode and we expect very good interest in this offering."

Bunnings is a wholly owned subsidiary of Wesfarmers, one of Australasia's largest listed companies.