Big box update
Clash over Bunnings Coolum
Bunnings launches an appeal for its proposed store at Coolum Beach (QLD)
Bunnings launches an appeal for its proposed store at Coolum Beach (QLD)
 
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Results for Masters and HTH sell off due soon and profit outcome for BWP Trust
HNN Sources
The battle to have a Bunnings store at Coolum (QLD) is ongoing; green light for Bunnings Doncaster; the proposed Bunnings Panorama store is undergoing an assessment process; Bunnings Yarrawonga is now owned by a Chinese investor; Woolworths should decide on who will own its home improvement businesses soon; and a $310.5 million profit for Bunnings Warehouse Property (BWP) Trust.
Bunnings Coolum continues to polarise

Bunnings Group Ltd have lodged an appeal with the Planning and Environment Court over the Sunshine Coast Council's rejection of its original proposal for a 12,150sqm development at one of the major entry points to Coolum Beach (QLD).

The hardware chain has also started public notification on a third development application for the site, having been knocked back twice already by the council.

Bunnings' actions have infuriated some community members including Development Watch president Lyn Saxton who told the Sunshine Coast Daily they would be joining the council as co-respondents to the appeal. She asked:
What's the purpose of having the third application that hasn't been decided on and going to court with the first one?

Ms Saxton labelled the moves "pushy tactics" from Bunnings and said she did not expect the council to "give in" on the third application for a scaled-down, 5850sqm Bunnings along with a service station (300sqm) and restaurant (300sqm). She said the council's reasons for rejection of the previous proposals were not changed by the size difference of the latest incarnation. Ms Saxton said:
Council can't now turn around and approve the third one. The reasons for refusal will not have changed. The reasons for objections for us and in the council decision was not because of the size.

She believes there were a number of areas where the previous applications hadn't complied with the planning scheme.

Sunshine Coast mayor Mark Jamieson said he respected the "democratic right" Bunnings had to lodge the appeal and added it was important each application was assessed independently by the council. He said he could also understand the community's frustrations with the process.

The economic development branch was "broadly supportive" of Bunnings' claims the development wouldn't significantly impact or compromise the role of Coolum Beach. But the strategic planning department advised the project would service a catchment far wider than the local community and would be likely to negatively impact hardware and specialty stores in the area.

Bunnings' general manager - property, Andrew Marks, said he was "very disappointed" the council had refused the application and the appeal had been lodged as a result, saying a Bunnings Warehouse in Coolum would provide a number of benefits to the community.

The public notification period for the latest proposal on the site will wrap up on August 25 which is the last day submissions on the proposal can be made.

Related:
Big box update: Bunnings fights for Coolum - HNN
Bunnings tries a second time to build in Coolum - HNN
Bunnings Doncaster will be built

Construction on the Bunnings store in Doncaster (VIC) is set to go ahead after Manningham Council gave the green light to the latest version of the plans.

The $73 million development will go up next door to Westfield Doncaster shopping centre and include 250 apartments - 99 flats on top of the 11,000sqm multi-level store as well as two apartment towers. There will be 350 carparks for shoppers.

Initially the Bunnings development threatened a legal battle between the retail giants, with Westfield concerned it would affect future growth of its huge Doncaster complex, which has recently announced a massive $500 million expansion.

There were further worries about traffic chaos created by the proximity of the apartment towers on top of the Bunnings store and Westfield, but the retail giants ironed out the problems with the towers moving to the other side of the development site and the hardware store shifting even closer to Westfield.

It is not yet known when construction will start, but Andrew Marks, Bunnings' general manager - property told News Corp. the development would be undertaken in three stages and was designed in line with Manningham Council's vision for Doncaster Hill.

Related:
Big box update: Bunnings still in Doncaster - HNN
Assessment for Bunnings Panorama

Plans to build a $42 million Bunnings store in Panorama (SA) will be assessed by October, seven months later than initially expected.

Amendments to the plans were submitted to the local council late last year. However, in February the big box chain delayed the application "to allow new information to be considered".

A Mitcham Council spokesperson said Bunnings had submitted a number of amended plans to address community and council concerns. The spokesperson told Adelaide Now:
The application is currently being assessed and it is anticipated that a report will be presented to the Development Assessment Panel within the next three months.

The council wanted extra information about landscaping, hours of operation and heavy vehicle access, while residents were concerned about traffic issues.

The Say No to Bunnings Panorama spokesman Peter Bryant said he was still concerned about the company's application. The group has collected more than 2000 signatures against the development since October last year. He said:
Resident sentiment hasn't changed when it comes to having a giant bulky goods outlet dropped on their doorsteps, particularly one with no economic or planning justification.
We're still concerned about the impact of an extra 5000 car and truck movements in our suburbs every day and around an intersection already at capacity. We remain hopeful the Mitcham Council will protect our community by saying no to a Bunnings at Panorama.

Panorama Clapham Community Group spokesman Neil Baron was comfortable with the delay, providing community concerns were addressed. He said:
It appears they are doing the right thing to meet the needs and requests of the locals. They won't make everyone happy, but that is the way of the world.

Bunnings general manager - property, Andrew Marks said the company had worked collaboratively with the council to amend plans.
This includes providing additional technical information in recent months in order for council to make a proper assessment.

Related:
Big box update: Bunnings could rethink Panorama store - HNN
Big box update: Bunnings attracts protest and support - HNN
Bunnings Yarrawonga has Chinese owner

A mainland Chinese investor has purchased the Bunnings Yarrawonga store in regional Victoria for $11.5 million on a sub-5% yield, according to the Financial Review.

Selling agent CBRE said it was the first time a Chinese investor had acquired a Bunnings Warehouse, and the sub-5% yield was a record for a Bunnings store outside a major metropolitan region.

Bunnings stores have become among the most-sought-after retail properties by private investors because they are supported by long leases.

Recently it was revealed that New Zealand commercial property investor Ben Cook was the buyer of the 14,760sqm Bunnings Warehouse in Sydney's Eastgardens that sold for a record $56 million in October.

The sales campaign for the Yarrawonga Bunnings was steered by Justin Dowers, Mark Wizel, Kevin Tong and Joseph Du Rieu of CBRE Retail Investments. Mr Wizel at the start of the sales campaign:
There is evidence that buyers are gaining more confidence in the performance of key regional cities within Victoria, stemming from increased government expenditure in these regions, along with improved living conditions (mostly related to affordability) driving population growth.

Related:
Big box update: Construction starts on Bunnings Yarrawonga - HNN
Big box update: Bunnings in Yarrawonga - HNN
Woolworths' hardware decision coming soon

The Street Talk column in the Financial Review reports that a decision on Woolworths' home improvement businesses could be made by the end of the week.

Street Talk understands the wealthy Sydney-based Salteri family, is among the group of wealthy investors, that have submitted a competitive offer for the Masters sites and have already started sounding out retail partners.

The Salteris helped to establish Transfield Holdings that has interests in infrastructure, renewable energy and industrial services, along with services company Tenix, which is now owned by Downer EDI.

Private equity multinational Blackstone, which submitted final offers for the Masters business and the Home Timber and Hardware business, was still waiting on an update from Woolworths and its adviser Citi as of August 14. In the same position is the consortium of big box retailers backed by property group Charter Hall, which bid only for Masters. However, both are understood to remain in the race.

Although Blackstone and Charter Hall both bid for Masters, it is believed Blackstone is also prepared to take on the asset's leasehold liabilities, which could amount to $1.2 billion when all the rent on vacant properties is taken into account.

Sources also told Street Talk that Anchorage Capital Partners is the frontrunner to acquire Home Timber and Hardware and may be close to securing exclusivity on this part of the deal.

For now, it has currently displaced Metcash as the leading bidder for the HTH business. A company spokeswoman said: "Metcash is still part of the sale process being run by Woolworths."
BWP Trust achieves $310.5m profit

The property boom has delivered a bumper $310.5 million profit to Bunnings landlord BWP Trust, courtesy of $202.6 million portfolio revaluations. That represents a 48% increase on the 2015 result.

As private investors, searching for yield, pay more for Bunnings-leased stores, the value of the BWP Trust portfolio rises.

Recent Bunnings transactions are yielding around 5%. The capitalisation rate for the overall BWP Trust portfolio tightened 56 basis points over the year to 6.77%. Even without the portfolio gain, BWP Trust's underlying profit lifted 6% to $107.9 million.

Total return over 10 years hit 13.5% a year, its highest level in the past five years. However the trust faces a quandary. New stores are too expensive to buy, and nor does BWP Trust want to necessarily sell off the ones it owns. No acquisitions were made in the last year. Managing director Michael Wedgwood told the Financial Review:
We're looking at everything at the moment, but at current pricing we just can't make the numbers add up.

Citi analyst Adrian Dark noted during an analyst call that, even as investors place a premium on BWP's security of income, the average lease length across its portfolio is steadily declining. It is now at 5.9 years.

Mr Wedgwood and his team were quick to point out that the structure of leases has changed - with more options - and the great majority of Bunnings' were expected to go well beyond the 5.9-year figure. He said: "It is only one indicator of the risk of the portfolio."

Related:
Big box update: BWP Trust monitors Masters sites - HNN
HNN Sources


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