Retail rich lister Brett Blundy buys bulk goods centre for $49 million

Rich list member Brett Blundy, best known as the owner of the Diva and Bras N Things retail chains, has added to his burgeoning bulk goods property empire by acquiring a homemaker centre in Sydney’s south for $49 million.

Blundy’s investment vehicle BB Retail Capital bought the Homeworks Caringbah centre from Colonial First State. This takes his empire of bulk goods homemaker-style centres to six, including centres in the outer Melbourne suburb of Cranbourne, and sites in the NSW towns of Newcastle (where he owns two centres), Mittagong and Tweed Heads.

The value of the portfolio has been put at well over $300 million.

The deal, negotiated by Jones Lang LaSalle, was struck on a healthy yield of 9.5%. The 14-year-old centre includes Harvey Norman, Freedom, Nick Scali and Forty Winks stores as anchor tenants.

According to a report in The Australian, BBRC is tipping retail spending in the Sutherland Shire will rise from about $5.5 billion to a projected $11 billion by 2026.

While Blundy is clearly prepared to make a long-term bet on the strength of the bulky goods format, the sector is generally acknowledged to have been the hardest hit of all commercial property types since the GFC.

Not only have rents and yields fallen by 150 to 200 basis points since late 2007, but a number of highly indebted owners have been forced to sell up, allowing private investors like Blundy to swoop.

However, a recent report from commercial property firm CB Richard Ellis suggested the sector had entered a recovery phase – albeit a protracted one.

CBRE’s director of bulk goods retail, Alistair Palmer, says demand for quality bulk goods sites would increase as retail conditions improved and big retailers ramp up expansions plans, with Woolworths push into the hardware chain a prime example.

“While rental growth remained limited across all bulky goods markets over the year to June 2009, CBRE’s quarterly rental surveys have yielded positive results in 2010 with rents in prime centres continuing to stabilise,” Palmer said last week.

However, the long-term outlook for the sector remains mixed. CBRE says there are nine new bulky goods centres set to be completed over the next 12 months, which is likely to put renewed pressure on yields.

In other bulky goods news, private investor Terry Kilmartin’s investment company Kilcor Group purchased the Morayfield Supa Centre from Mirvac for $38.5 million.