Woolworths covenant offers new 10-year leases with rental growth

Two strongly performing Woolworths supermarkets in the North Island: Woolworths Regent, located in Whāngarei; and Woolworths Gisborne, are for sale by CBRE’s Capital Markets team individually or together by deadline private treaty closing on May 1, 2025. 
 
Brad Ross, CBRE Associate Director, said the assets provide exceptional investment fundamentals. 
 
“Both assets offer rental growth from 5 per cent minimum fixed base rent reviews on the fifth and tenth anniversaries of lease commencement. This is in addition to the store turnover performances respectively lying at 103% and 96% of turnover rent thresholds. 
 
“Turnover rent is paid annually, should turnover thresholds be achieved, and may result in base rent reviews in excess of the minimum fixed 5% rent reviews offered.” 
 
Brent McGregor, CBRE Executive Chairman, said both properties are being sold subject to a leaseback to General Distributors Limited (trading as Woolworths), a subsidiary of Woolworths New Zealand Limited, which is in turn wholly owned by ASX listed Woolworths Group Limited. 
 
The leases have 10 year initial terms with final lease expiry dates in 2085 if rights of renewal are exercised. 
 
The assets provide strong exposure to the non-discretionary supermarket sector, which has the largest share of New Zealand’s total retail trade industry. 
 
Caiti Morgan, National Director of Retail Capital markets at CBRE, said the supermarket sector presents highly defensive attributes backed by core demographic trends such as population growth. 
 
“The performance of the supermarket sector is resilient and stable, with Woolworths New Zealand also offering an exceptional tenant covenant.” 
 
Woolworths Regent, located at 9 Kamo Road, Whāngarei, was redeveloped, refurbished and expanded by Woolworths in 2022, with over $8 million spent as part of the process.   
 
The asset is returning an estimated $1,350,665 per annum net plus GST. The supermarket comprises approximately 3,845sqm of lettable area, situated within a catchment that has grown 20% in the 10 years to 2024, outperforming the national average population growth rate. 
 
Woolworths Gisborne, located at 109-115 Carnarvon Street in the town centre, is the only Woolworths supermarket within a 120km radius, giving it an expansive trade catchment in which it performs strongly.   
 
Constructed in 2021 on the site of Woolworths’ previous Gisborne store, the building is award winning, having received a merit award in the retail category at the 2022 RLB Property Awards. The asset is currently returning an estimated $1,697,861 per annum net plus GST and outgoings. 
 
Woolworths New Zealand is one of the country’s largest private sector employers.  It operates over 180 supermarkets in New Zealand and employs around 22,000 people. 
 
“Woolworths Regent and Woolworths Gisborne are expected to be highly coveted investment opportunities. They are materially different propositions to previous Woolworths sale and leasebacks, which coupled with quintessential defensive characteristics of the supermarket sector, adds up to an exceptional package for investors,” said Ross.