Long Leases Woolworths

I am looking a small Woolworths supermarket (3,300m2) that has a good long lease 25 years
Has anyone had any problems with these types of properties and dealings with Woolworths ?
Its has a net rental of $1.3m likely yield around 6pc

 

If financing is involved the lease needs to fit with lender requirements. A good commercial broker helps. Lenders go hot / cold with various property types and locations. Woolworths did have a process of flicking property leases to the new property trust (SCA)...Why not this one ?

 

Not tied to a shopping centre development?

 

Not certain
I am waiting for the IM
I like the long lease

 

It might be a long lease but could be short on favourable clauses (who is the vendor)?

 

Yea looked at one recently - different scenario, it was actually on a short lease. Problem with Woolworths leases is they're often tied to revenue. Your $1.3m is probably not a fixed figure. So you'd have to take a view on that.

I was looking at the short lease site because I wanted a development site. Not sure on being stuck there and getting 5-6% yield (assuming your rent fluctuates with Woolworths revenue).

 

How do you think woolworths will go in the future with aldi and others coming in?Their business is based on high outgoings,expenses and turnover

 

Their occupancy costs are generally quite low - Blue chip tenant, ASX listed, Anchor tenant in subregional/neighbourhood centres (also a developer in neighbourhood centres). They 'sell' shelf space to their suppliers further reducing their own occupancy costs.

 

I like the Aldi model. They buy a site and develop it to a larger use than a single store and sell it all. Then lease back their own site. The basic strategy results in a site that adds cashflow upfront from profit and sale.

Woolworths sale of its properties to SCP etc hit a issue when they realised the complexity with improving a site. They have exchanged ownership of sites with cashflows from property sales and meant they are now burning their way through what was once equity.

Ansett used to own a substantial terminal and hanger presence in Australia. Whats that worth ?