An Adelaide investment group has snapped up the Woolworths building on Gurwood Street, and with it a slice of the booming grocery business.
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Property investment manager Parkstone has bought the building at 30 Gurwood Street for $20 million in an off-market deal that managing director Tim Wilkin said was an investment in an "exceptionally resilient" regional centre.
"It's a big investment, [but] we see the returns are there and this quality of asset is one that we think will stand the test of time," he said.
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Mr Wilkin said that Woolworths Wagga was an attractive tenant as a stand-alone supermarket.
"It's one of the few major supermarkets in Wagga that has super convenient on-road car parking, so it's very easy for the shopper to get in and out of the store," he said.
Savills' national director retail investments Steven Lerche managed the sale and he said that a single tenant building with growing turnover was an attractive prospect for investors.
"You've got one tenant, an ASX-listed company behind them, you've got secure base rent and you've got growth out of turnover rent," he said.
Parkstone and Woolworths have a "percentage rent" agreement, meaning Parkstone receives a percentage of the store's profits, so the better business Woolworths does, the more Parkstone stands to gain from the deal.
As the business currently has a "very strong trading history of more than $40 million a year", the purchase makes for a quality investment, Mr Wilkin said.
"The performance of the business does add to the quality of the asset" he said.
The Wagga purchase is part of a larger expansion into food-based retailers for Parkstone, which has pledged to spend a significant sum refurbishing the supermarket and car park.
Parkstone already has two properties in regional NSW - the Riverdale Shopping Centre in Dubbo anchored by Woolworths and a standalone Woolworths supermarket in Orange.
Alongside the Wagga store, Parkstone purchased another Woolworths-anchored retail centre in Virginia, in Adelaide's fast-growing northern suburbs, for more than $20 million.
"Our experience points to grocery-anchored retail centres in regional locations continuing to perform well throughout the pandemic with positive sales growth of anchor tenants across the portfolio," Mr Wilkin said.
He said that Woolworths was set to undertake a major refurbishment of the Gurwood Street property in the near term, with an eye to further growth.
"Woolworths is an excellent covenant to have in the building, which is the reason we've purchased this one," Mr Wilkin said.
The purchase is the latest big money property sale in the area over the past two years. A row of properties on Hammond Avenue, including the KFC, Hungry Jack's sites and the furniture store hub, sold for $46 million in November 2020, in what is believed to be the city's biggest commercial sale.
More recently the Thomas Blamey hotel was sold to an investment group for "north of $20 million".
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