Investors chase big-name tenants in first commercial auctions of the year
Furniture stores and a government-tenanted regional building headlined the first Burgess Rawson Sydney auction of the year, which showed the market was slow to awaken after a long summer break.
There was a 58 per cent clearance rate from the 19 properties that went under the hammer, where the average yield was 7.23 per cent and sales worth almost $30 million were recorded.
That compares with a clearance rate of 62 per cent at Burgess Rawson’s December auction, and 83 per cent in June.
Two John Cootes Furniture stores were among the best performers, both fetching more than $5 million.
A store in South Penrith went for $5.6 million, with an indicative yield of 6.7 per cent based on an annual income of $374,300.
A store in Tuggerah, on the Central Coast, went for $10,000 more, giving a yield of 7.6 per cent based on an annual income of $426,889.
Childcare centres also continued to perform strongly, this one in Green Point selling for $2,405,000. Photo: Supplied
Location, land size and landlord-friendly leases were the key to their popularity with bidders, according to Michael Gilbert, director of sales at Burgess Rawson.
“Both were prominent pieces of real estate. Obviously South Penrith had a large land size, it’s next to a KFC, 7-Eleven and Dan Murphy’s, and it’s on major arterial road, so it was always going to be well supported,” he said.
“The Tuggerah store is a bit of a landmark, it’s a big bright blue building on a roundabout on the Pacific Highway, which again is a main thoroughfare for the town.”
John Cootes Furniture was acquired by Elanor Investor Group in mid 2014, with Mr Gilbert saying expansion plans under the new ownership had been attracting bricks and mortar investors to the brand.
In 2015 the brand opened new outlets in Campbelltown, Taree and Bathurst, now carrying a portfolio of 12 stores.
“As they’ve (Elanor) expanded on their new ownership, more people are looking to them as a solid investment,” Mr Gilbert said.
The Penrith and Tuggerah stores were two original ones resulting from the company’s 1990 expansion.
“The terms of the leases are very landlord friendly, and both listings were well contested,” Mr Gilbert said.
He hinted that similar asset types were in the pipeline for Burgess Rawson this year.
In other results, a NSW Government-tenanted building in Dubbo was the highest sale price at the time of publication, with an investor paying $6.6 million.
The building, on a five-year lease to NSW Health, with options until 2026, was sold on a yield of 10.8 per cent. It is currently generating an indicative annual income of $711,936.
A trio of childcare centres, owned by ASX-listed provider G8, were also strongly contested among bidders.
A centre located at Green Point, on the Central Coast, pulled the highest result of the three – $2,405,000 to give a yield of 5.6 per cent.
Another centre in Tamworth, in north-west NSW, sold for $1,705,000 on a 6.72 per cent yield, and one in Punchbowl, in Sydney, for $1.6 million, on a 5.3 per cent yield.
Below is a list of the properties that sold on the day.
Results supplied by Burgess Rawson
