Woolies snaps up Caltex sites for new supermarkets

Woolworths will transform 10 Caltex service stations in Sydney and Melbourne into suburban shopping destinations after emerging as one of two institutional buyers who snapped up the majority of 25 sites sold last week for $136 million.

Melbourne-based real estate fund manager, marketer and developer Oliver Hume is understood to have acquired 12 Caltex sites in NSW and Victoria on behalf of an Asian-based investment group. The three remaining sites were acquired individually by other development groups.

A spokeswoman for Woolworths confirmed the acquisitions.

“As retail continues to evolve and our customers increasingly look for more convenient shopping locations, we’ve had the opportunity to acquire a portfolio of property assets,” she said.

“We look forward to providing further updates on our plans at these sites in due course.”

It’s understood that Woolworths will no longer offer fuel sales on the former Caltex sites after they are redeveloped.

Oliver Hume managing director Michael Duster confirmed the prominent real estate group was behind a number of the Caltex site acquisitions, but referred questions to David Rogers, the group’s managing director of property funds.

Mr Rogers said he could not comment due to legal reasons.

The tranche of 25 sold sites is half of the 50 sites Caltex is selling following a review of its retail network.

Last week, Caltex revealed the sale of the first 25 sites would yield $92 million after costs.

The fuel retailer will pay all buyers an income in the form of a licensing agreement whilst it undertakes remediation works prior to the handover of the sites.

Caltex recently rejected an $8.6 billion takeover bid from Canadian suitor Alimentation Couche-Tard. The takeover approach was revealed just a day after Caltex announced plans to float a service station listed property trust that would comprise 250 core retail sites.

Caltex chief development officer David Bridger said the success of the sales campaign for the 25 non-core sites had “unambiguously vindicated the divestment strategy”.

“These sites had been identified as having a higher and better, non-fuel related use and obviously the market is in accord with that rationale.

“Given the success of this first tranche of sites, we are very confident in putting to market another 25 sites across Australia early next year,” Mr Bridger said.

The sales of the 25 properties – 15 in NSW, eight in Victoria, and one each in Queensland and WA – were brokered by CBRE’s Mark Wizel and Julian White with Lincoln Blackledge of Stonebridge.

Mr Wizel said the marketing campaign had attracted more than 2000 enquiries and 160 offers.

He said developers had been attracted by strong locations, the lack of development site options, predictions of housing undersupply, and the licence agreement that offered an income well above what they were currently returning on cash in the bank.

“Given widely forecast predictions of a looming undersupply of apartments, purchasing one or more of these sites was an ideal way to build a pipeline to cater to pent up demand whilst generating an attractive income in the interim.”

Mr Wizel said the profile of buyers highlighted the appetite of local groups for development sites.

“The market’s response to the campaign was not surprising, indeed it was a clear indication that confidence is returning to the residential development sector on the back of what has been perhaps a surprisingly quick rebound in housing prices across key markets,” Mr Wizel said.

 

Extracted from Commercial Real Estate

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