Bunnings to take top billing at Portfolio Auctions

Thursday 25 August 2016

Written by Adrian Ballantyne, Real Commercial

A Bunnings Warehouse and a fleet of petrol stations owned by independent fuel retailer United are the prized picks at the latest Burgess Rawson Auctions.

The Bunnings at Warragul, in regional Victoria, will go under the hammer in Melbourne on September 14, while the six United petrol stations, spread across four states, will be auctioned in both Sydney and Melbourne on September 13 and 14. And investors are also certain to rush in for a Coles supermarket located not far from the Bunnings, with demand for properties leased to blue-chip supermarket tenants showing no signs of slowing.

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United Petroleum owns all six of the petrol stations, all of which come with new 20-year leasebacks to United, with further options to 2061.Two of the stations are in New South Wales at Dee Why and Yagoona, two are in Western Australia at Ellenbrook and Padbury, one is in Victoria at Geelong and the final property is in Tasmania at Sandy Bay.

Burgess Rawson director Jamie Perlinger says with petrol stations continuing to rate among the most sought after asset classes, United is testing the waters with a handful of its properties.

“The market is favourable for these types of investments and they’ve thought we’ll have a look and see what the market is willing to pay,” he says.

“When you look at them, some of them are brand new, they’ve all got brand new 20-year leases, 3.5% increases and the tenants are responsible for all the outgoings, including structural repairs and maintenance, which is a rare item in a lease.

“Investors really like that. It really is an investor-friendly lease.”

The heaviest competition is expected to come for the Bunnings Warehouse, which includes a 5094sqm building on a 10,510sqm site and is leased to Wesfarmers for 15 years, plus options to 2032.

The property attracts annual rent of more than $426,000, while the 2016sqm Coles, just 10km away in Drouin, currently fetches around $520,000.

Perlinger says there will be no shortage of potential buyers staking a claim for the big ticket items, though a string of childcare centres will also figure prominently.

“Definitely the Bunnings and the Coles supermarkets that are there, and you can’t go past the childcare centres as well. They’ve been very well sought after in the marketplace as well for long-term investments.”

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An award-winning Port Macquarie winery investment leased to Cassegrain Winery (business not for sale) and a hotel and spa retreat in the Victorian snowfields are also up for grabs.

The Cassegrain Winery, which features plantings, a French restaurant, a bottling line, modern warehouse and – somewhat bizarrely – a supercharger for up to six Tesla electric vehicles on its 13.5ha site, will be sold with a new 10-year lease to the winery’s current operators (business not for sale).

There is also scope for the buyer to potentially purchase a tourist-zoned 16.19ha neighbouring site. One of the more intriguing properties to be auctioned will be the Onsen Retreat and Spa, at Dinner Plain, just below Mt Hotham. Agents are tipping a yield of more than 9% for the resort, which is currently subject to a 15-year lease with options to 2032. The 2040sqm site is only 10 minutes from Mt Hotham’s ski slopes and attracts annual rent of more than $797,000.