9 Properties Leased to The Good Guys Nets $92m

Savills has transacted the sale of 9 separate bulky goods retail properties leased to The Good Guys across 4 states, for a combined $92m, representing the largest group transaction of its kind in the Australian market this year.

The properties are located in Victoria (Thomastown, Geelong, Bendigo and Ballarat), New South Wales (Caringbah and Ballina), Queensland (Ipswich and Cairns) and Western Australia (O’Connor), and all are leased long-term to The Good Guys, a wholly owned subsidiary of ASX-listed JB HiFi.

The sale prices range from $5,200,000 for the Bendigo property, up to almost $30,000,000 for the Caringbah property. Purchase yields range from around 6.25% for the capital city properties up to almost 8.00% for regional properties – compelling returns for a yield starved market.

The sale campaign for the portfolio attracted enormous interest from local and off-shore investors ranging from private investors for single assets, to major corporate investment groups wishing to purchase multiple assets. One such investment group snapped up 5 properties in 3 states for a total value of $63 million.

Savills Directors, Clinton Baxter, Nick Peden and Steven Lerche, said the sale had been one of the most anticipated divestment of 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.

“We expected strong interest from private investors seeking individual properties, but were particularly surprised by the numerous portfolio buyers seeking multiple properties across several states,” Mr Baxter said.

“We simply couldn’t satisfy all the portfolio offers due to overlapping property requirements, and ultimately chose to transact 5 of the properties with a Sydney-based investment fund and sell the other properties individually.”

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

“With The Good Guys being owned by ASX-listed retail powerhouse JB Hi-Fi Limited, investors feel extremely comfortable with the long-term security of the investment. All properties are in proven commercial locations, with a long history of successful trade,” Mr Lerche said.

The properties are all owned by the Muir family. Savills will be selling several additional properties also leased to The Good Guys in coming weeks, to complete the divestment.

“Of the original portfolio of properties we have been handling for the Muir family, it was crucial to the process that we finalised the single portfolio transaction before allowing individual properties to be sold. Now that has occurred, we are busy transacting the individual properties, with the opportunity offering exceptional value for investors at attractive yields” Mr Baxter 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.

Learn more about Savills Retail Investments.