Auction Rooms Roaring as East Coast Benchmarks Fall
Big brands and secure tenants continued to lure buyers at Burgess Rawson’s second portfolio auction of the year, with regional assets among some of the surprisingly strong sales. Childcare assets, service stations, fast food outlets and pubs achieved some of the highest prices at the auction, held across three days in Sydney, Melbourne and Brisbane. Of the 63 properties listed for sale, 53 sold, including six prior, logging a clearance rate of 84 per cent. Total sales hit almost $186.4m. The lot sales had a crisp average yield of 5.26 per cent and a blended yield – accounting for the scale of the properties – of 5.09 per cent. National partner at Burgess Rawson, Raoul Holderhead, said the auctions were dominated by private domestic buyers on the hunt for secure income. “Buyers are still out in full force for the quality assets with national brands and good long-term tenants,” he said. However, he said the market “had cooled a little” for the no-name strata retail assets, with inquiry levels falling.
One of the highest-profile sales of the auction was the historic Sarah Sands Hotel in Brunswick. The owners of the 168-year-old pub, which occupies a prime corner site in Melbourne’s inner north and has recently undergone a $2.7m facelift, were seeking $7m-plus. After a handful of bidders registered, the pub sold for $8.75m on a yield of 4.19 per cent. Meanwhile, the Bentley Hotel and Coles-owned First Choice liquor store, 7.5km from Perth’s CBD, sold for $10.06m on a yield of 4.06 per cent after an 82-bid marathon pushed the price more than $2m above reserve. Both pubs offer secure 10-year leases with two 10-year options to pub operator Australian Venue Co. PropTrack economist Anne Flaherty said 2021 was a record year for pubs, explaining that growth in buyer demand for hotel/leisure assets in Australia increased by 23 per cent between 2020 and 2021.
The highest price achieved across the three days was $11m for a store run by The Good Guys in Invermay outside Launceston, Tasmania. The large format store, newly leased until 2028 with options to 2048 and annual rent reviews, sold on a yield of 4.68 per cent. Another standout sale was a Toyota car dealership in Echuca, Victoria, which despite having only 2.5 years to go on its current lease term went 23 per cent over reserve to achieve $6,100,000 on a yield of 4.55 per cent. Mr Holderhead said the appeal of this asset was the 10,087sq m land size plus the quality of both the tenant Servco and the Toyota brand, Australia’s top selling car marque. “Plus Echuca is a super regional town,” he added.
Another big brand whipping up attention was KFC, with an outlet selling in Seymour in Victoria’s Goulburn Valley for $4.25m on a yield of 3.79 per cent and another selling in the central western NSW town of Wellington for $2.6m on a yield of 3.88 per cent.Other surprising regional sales included a 1292sq m commercial site in the western Victorian town of Colac leased to Reece Plumbing, which saw 26 registered parties push it to$970,000 on a yield of 3.82 per cent. A government medical asset in the Western Australian town of Butler sold for $7.175m on a yield of 4.04 percent. Childcare assets were hotly contested once again, with six centres going under the hammer across the three days, and two passed in. Advanced Early Learning in Merrylands achieved the highest sale of the Sydney auction – $7.1m on a yield of 4.25 per cent.
At the Melbourne auction, childcare assets in Western Australia were the standouts, with a new centre in Southern River selling for $6.56m on a yield of 4.76 per cent, and another in Wandi selling for $6.05m on a yield of 5.04 per cent. “With government subsidies backing the sector, childcare continues to go from strength to strength,” Mr Holderhead said. Meanwhile a new fondness for electric cars has not dampened investor demand for service stations, with eight selling over the three
auctions. Five service stations sold in Queensland, including a Puma in Kedron with lease options to 2075 that achieved $4.31m, the highest price of the Brisbane auction, on a yield of 5.75 per cent.