Aldi taps market with $700m sale and leaseback

Aldi taps market with $700m sale and leaseback

14 February 2020

Aldi has tapped the market for a $700 million sale and leaseback for four of its distribution centres along the east coast.

Aldi has appointed Jones Lang LaSalle to handle the portfolio and market sources have told the AFR that JLL have been meeting some of the local market’s biggest property players in the past fortnight, gauging buyer interest for the warehouse sites.

The announcement comes soon after hypermarket Kaufland withdraws from Australia.

In a statement on this week, Aldi’s corporate logistics managing director Damien Scheidel said the sale was in response to “an unprecedented level of interest” in the industrial portfolio.

“Aldi has decided to list for sale and leaseback four of its properties, releasing the inherent value of the assets, whilst maintaining long-term occupation through new lease agreements,” he said.

“Aldi has identified that now is the right time to recycle some of its capital.”

The selloff and leaseback comes as a bit of a surprise, given that Aldi’s modus operandi is a long-term play, with a prefer to own freehold property rather than to lease it.

Aldi opened its first store in Australia back in 2001 and now has more than 550 stores across the country, with a presence in every state and territory except Tasmania and the NT.

Since entering the Australian market, Aldi positioned itself as an alternative to the big supermarket players like Coles and Woolworths and it offered exclusive, low-cost product lines.

Aldi’s strategy has been working, with the German giant growing its revenue 12.1 per cent over the last five years on an annualised basis to $9.9 billion at December 2019, according to IBIS World. It has grown its market share from 5 per cent in 2011 to 9.3 per cent last year.

Supermarket and grocery store industry revenue in Australia overall is set to hit about $110 billion in 2020.

The $700 million deal is a similar size to KKR’s sale and leaseback of biscuit-maker Arnott’s property portfolio, assets that were snapped up by Charter Hall and Centuria Industrial REIT.

The Aldi warehouses, mainly along the east coast, will likely be keenly contested as property groups have been snapping up logistics assets as they offer steady returns even as retail property comes under pressure.

Other big players are also cashing in with private equity giant KKR offloading a near $650m portfolio of Arnott’s facilities and Blackstone selling, also via JLL, an $800m portfolio that it assembled with Fife Capital.