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Good Guys $130m portfolio on off-shore radar

good guysThe sale of a national retail portfolio with all properties leased to The Good Guys has attracted strong market interest prior to the official launch with feelers coming from local, interstate and off-shore interests, according to exclusive agents Savills.

The portfolio of 15 properties across Victoria, New South Wales, Queensland, and WA, comes to market in the midst of the strongest retail investment market in the nation’s history.

According to Savills research, investors have spent circa $35 billion on more than1000 retail assets over the last five years including a massive $9.38 billion in the 2015 calendar year followed by a healthy $6.5 billion plus in 2016.

Savills director CBD & metropolitan sales, Nick Peden, who is managing the marketing campaign with Clinton Baxter and Steven Lerche, said the sale was arguably the most anticipated sale of prime Australian retail stock of the last 12 months.

“Of the retail properties that have come to market in recent times none have offered such a combination of geographical diversity, with exceptional underlying land value and a blue-chip tenancy profile.

“This is the perfect opportunity for investors small and large to add high profile retail assets to their portfolios, indeed we have already fielded early interest from the local market plus enquiries from Singapore, Malaysia and Hong Kong, and that should be no surprise given the significant Asian interest in prime Australian retail assets.”

Baxter said the wide price range of the assets, exceptional main road locations in key commercial precincts and attractive rental returns, together with blue-chip tenancy profiles would appeal to a wide range of investors ranging from SMSFs to private investors, syndicators and property funds, based locally and off-shore.

He said the statement released by JB Hi-Fi in September last year, that there was potential to add four to five new Good Guys stores a year over the next three years, in addition to the continuation of the JB Hi-Fi store roll-out, was testament to both the strength of the brand and the long term demand for household goods.

“With the acquisition of The Good Guys, JB Hi-Fi Limited has positioned itself as the market leader in the sale of home appliances, white goods and consumer electronics.

“The fact that 12 of the 15 stores are in Victoria and New South Wales where strong population growth is driving a very robust housing market, underpinning exceptional ongoing demand for household products, is something that will not be lost on astute investors,” Baxter said.

Victoria’s population grew by 157,500 to 6.1 million in the year to September, while Sydney’s population has just passed the 5 million mark.

JB Hi-Fi Home 2Savills said The Good Guys, according to several sources, is the largest home appliance retailer in Australia with a 26 per cent market share. The new combination with JB Hi-Fi is now estimated to control 29 per cent of the market. JB Hi-Fi Limited has just confirmed significantly increased full year sales of $5.58 billion for FY17, and a record net profit after tax expectation of around $206 million.

Lerche said the assets benefitted from a range of factors which would reinforce their market position including modern, well-presented premises, with excellent exposure in high profile retail destinations, including associated car parking, and in locations undergoing significant population growth, further fuelling retail expenditure and the success of retail tenants.

“These factors, along with potentially significant depreciation benefits, will further enhance the fundamental value of the assets and provide potential purchasers with a high degree of confidence in the long term security of their investments,” Lerche said.

The Good Guys was founded in Melbourne’s northern suburbs in 1952, and remained a family owned business until late 2016 when the company was purchased by JB Hi-Fi Limited for $870 million. The business has grown to be one of Australia’s leading retailers in the sale of white goods and electronics, with an approximate annual revenue of $2.1 billion.

Baxter declined to put a price on the portfolio as a whole however reports put the value at circa $130 million. He said the properties were for sale individually with prices expected to start at around $2.5 million.The properties will be sold by Expressions of Interest closing in May.

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