Well-placed retail outlets in favour

Thursday 13 December 2018

Strong demand for well-located retail outlets was on display at yesterday’s Burgess Rawson auction, with a Bunnings property in Tasmania selling at an extraordinary yield of more than 3 per cent.

The crisp yield on the warehouse that sold under the hammer was struck at $14.06 million and showed a yield of 3.13 per cent.

This put the property, which was picked up by an institution ­attracted to the exceptional terms attached to the complex, well below the previous benchmark of 4.65 per cent.

The Bunnings, on the Brooker Highway in Hobart’s Glenorchy, spans 16,900 sqm.

Bunnings started trading on the significant 38,310 sqm landholding in 2015.

The rare 25-year triple-net lease runs to 2040 with a 25-year option to follow.

It has annual fixed 3 per cent rises through to 2040.

The sale smashed the $9m ­reserve and was the highlight of the day.

Burgess Rawson director Billy Holderhead said the property drew 27,000 views online over the past 15 days and interest was driven by the underlying value of the land and buildings.

Other long-leased retail sold well with a 7-Eleven store in Perth’s Ascot going for $7.2m at a 5.99 per cent yield.

A PETstock outlet in Melbourne’s Cranbourne sold for $2.6m on a 5.4 per cent yield while a NAB branch in Ballarat sold for $6.25m on a 5.32 per cent yield.

A new freestanding 3,870 sqm Coles supermarket at 104 Lonsdale Street in Victoria’s Hamilton also sold for $23m, at a yield just under 5.2 per cent.

It carries a net lease for 20 years to 2035 plus two further 10-year options.

It has been a high performer since the supermarket relocated from a smaller building and is just 0.192 per cent off its turnover threshold.

Net income is projected to reflect close to $1.24m a year by December 2019, above the base rent of $1.19m.

A Woolworths supermarket at Kyabram in Victoria, the region’s largest and with a 20-year lease to the supermarket chain until 2034, was passed in.

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Written by Ben Wilmot, The Australian

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