Buyers United at portfolio investment auctions
It was a return to form at this week’s Burgess Rawson portfolio auctions, with a Coles supermarket and Bunnings Warehouse in regional Victoria, as well as six United petrol stations, all selling under the hammer on tight yields.
After many buyers laid low at the August auction in Melbourne, a string of blue chip properties on offer across auctions in both Sydney and Melbourne saw investors make strong plays to secure the majority of the assets under the hammer.
More than $88 million worth of property sold at the Melbourne auction on Wednesday alone, with another $43 million changing hands at Tuesday’s auction in Sydney.
The pick of the properties were the United petrol stations, with all six snapped up on tight yields of around 5%. A station at Dee Why in New South Wales sold for $7.2 million on a yield of 4.86% – the sharpest of any property sold across the two days.
Another United station at Yagoona sold for $4.82 million on a 4.98% yield, while others at Sandy Bay in Tasmania ($4.37 million) and Geelong ($5.65 million) and Box Hill ($3.47 million) in Victoria all sold on yields of just over 5%.
Childcare centres also featured prominently, with a trio of facilities leased to leading operator G8 all quickly snapped up.
A facility in Cranbourne in Melbourne’s south-east sold for $1.82 million on a 4.9% yield – the second-tightest of all properties sold – while another in Tarneit went for $3.7 million on a yield also below 5%.
Investors also battled hard for the auction’s trophy listing, a Coles supermarket in the regional Victorian town of Drouin, which eclipsed the $10 million mark on a yield of 5.28%.
Also sought after was a Bunnings Warehouse in nearby Warragul, which sold for $6.425 million.
Burgess Rawson’s Adam Thomas says local money won out in the race to secure both the Coles and Bunnings.
“We had a local buyer, with overseas and interstate bidding on both of those assets,” Thomas says.
“I believe investors are still chasing strong, secure lease covenants and blue chip tenants. The highly desirable properties are still attracting strong interest and will continue to do so,” he says.
“We had a strong day in Sydney the previous day, with some really strong results there.”
Thomas says the market continues to see strong demand for well-leased childcare centres.
“Again that goes back to the operator and the lessee being G8, the largest listed childcare provider in the country,” he says.
“That’s what investors are after: that strong, secure lease covenant with long lease tenure.”
Among the other properties sold were a Caltex service station at North Lakes in Queensland, which reached more than $8.283 million and a yield of 5.21%, a Red Rooster with accompanying retail in Queensland’s Hervey Bay, which sold for $6.4 million, and a Supercheap Auto outlet in Bega, which went for $1.501 million.