Grog shop sells for $15.2m as liquor stores slake investors' thirst
The Dan Murphy’s in Dixon, Canberra, sold for $15.16m on a 4.25 per cent yield.

Grog shop sells for $15.2m as liquor stores slake investors' thirst

Commercial property investors showed hearty appetite for liquor stores leased to Coles or Woolworths at a portfolio auction in Sydney on Tuesday, mirroring the appetite seen for pubs.

However, the overall clearance rate at the event hosted by commercial agency Burgess Rawson dipped sharply amid “discussions” about the impact of rising inflation on investment decisions.

From the 19 properties listed for sale, only nine sold under the hammer of auctioneer David Scholes, and three sold prior to auction, reflecting a clearance rate of 63 per cent and total sales of $56.3 million.

This compared with near sell-outs at previous portfolio auctions hosted by Burgess Rawson, including 20 out of 21 properties sold at a Melbourne event at the end of September.

Burgess Rawson’s Sydney director Darren Beehag played down the lower clearance rate, but highlighted the changing view on rental terms in leasing contracts.

“There was more discussion around whether rent increases linked to CPI or fixed increases are better moving forward,” Mr Beehag said.

“Buyers have different views, but they are definitely looking at CPI[-indexed investments] a lot more closely.

“In the last few years, CPI was seen as inferior to fixed rent increases. So the wheel has turned on that,” Mr Beehag said.

While the clearance rate was lower, Tuesday’s auction event showed an obvious connection with the high-flying pub sector, Mr Beehag said, as three liquor stores sold under the hammer at strong prices.

Leading the pack was a Dan Murphy’s in Dickson, Canberra, underpinned by a 10-year lease to the Endeavour Group retailer, which sold to a Sydney investor for $15.16 million on a 4.25 per cent yield.

In Maroubra in Sydney’s eastern suburbs, a First Choice Liquor with a five-year lease back to the Coles Group, sold to a Sydney investor with a number of liquor and retail properties for $10.17 million on a yield of 3.43 per cent.

Both these properties sold well above their reserves, after attracting 20 and 15 registered bidders respectively.

A spokeswoman for Burgess Rawson said the Liquorland sale was the lowest yield ever achieved for a First Choice liquor property and the second best yield for a large format liquor asset across Australia.

Rounding out the liquor store sales, a Coles Group Liquorland in Woonona, a northern suburb of Wollongong, sold for $2.51 million on a 3.75 per cent yield.

Investors also showed appetite for some medical-related investments and childcare centres, properties that come under the basket of “essential services real estate” – though a number of these properties were also passed in.

A prominent orthodontics practice in Canberra, backed by a seven-year lease, sold for $5 million on a 4.8 per cent yield while a medical centre in Katoomba in the Blue Mountains sold for $5.4 million on a 5.4 per cent yield.

Also selling under the hammer was a physiotherapy centre in Dee Why in Northern Sydney. It fetched $991,000, a yield of 5.8 per cent.

Mr Beehag downplayed the lower clearance rate and said Tuesday’s results were “pretty positive”.

He said there was no obvious theme around the properties that were passed in and was confident of securing a number of sales post-auction.

Among the properties passed in were a childcare centre in Five Dock in Sydney’s inner west and a Parramatta residential complex of 12 units leased to Zenitas Healthcare, a provider of aged care and disability services.

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