Investors chase the sun – yields and long leases lure buyers

Friday 11 May 2018

More than $26 million of Queensland assets were sold under the hammer as investors become increasingly prepared to pay a premium for quality properties with long leases.

NORTHERN EXPOSURE: Strathpine Childcare Centre at 136-140 Gympie Rd sold under the hammer for $6 million.

Seven Queensland properties were sold in last week’s Burgess Rawson auctions in Sydney and Melbourne, with southern investors making their presence felt in the Sunshine State.

Burgess Rawson’s Glenn Conridge said that despite yields tightening, NSW and Victorian investors could snare a property with returns to 200 basis points better in Queensland than their home state.

“There has always been better returns in Queensland, and there’s always strong competition for quality or new buildings, with a good covenant and long WALES (weighted average lease expiry),” he said.

The properties sold were:

Mr Conridge said strong lease terms were an investor’s greatest consideration when buying properties.

“The lease is paramount with any of these investments,” he said.

“A 10-year lease is an instant attraction, while a short lease is a harder sale.

“The Strathpine and Southport childcare centres have leases running up to 2032 plus options, while the Oxenford childcare centre lease went to 2024 with an option, and the Harristown 7-Eleven lease went to 2020.

“A strong long-term lease is three-quarters of the battle and the price-and-yield comparisons for these deals to a large extent reflect that,” Mr Conridge said.

View the original article here.

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Written by Chris Herde, Brisbane Courier Mail

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