A recently built Dan Murphy’s on Mosman’s Military Road has sold to a Sydney-based private investor for $13.25 million at Burgess Rawson’s September portfolio auction.
Nine of the 13 properties slated for auction sold on the day – at a total value of more than $41 million – with a clearance rate of 69 per cent.
The 2017-built Dan Murphy’s, which was being sold on behalf of Charter Hall, received 278 inquiries and what is believed to be record-breaking web traffic during the campaign – something listing agent Darren Beehag attributed to the rarity of a Mosman address.
“It’s a combination of Mosman, a combination of being near new and having 12 years to run on a 15-year lease. They [bottle shops] are not that common, particularly on the lower north shore,” Mr Beehag said.
“It’s near new, has the best part of a full-term lease and [it’s about] the fact it’s a Dan Murphy’s.”
Mr Beehag said interest had come from deep-pocketed investors desperate to find somewhere to funnel cash that had been holed up in term deposits, which have been returning record-low rates.
“There’s a lot of money out there that’s trying to find a home. They [high-net-worth investors] are incredibly frustrated with the low returns they are getting on cash, and that yield on 4.85 per cent rent is significantly better than the bank.”
The lease on the property, at 718-728 Military Road, to Woolworths Group, ends in May 2032 with options extending to 2062.
It’s currently generating a net income of $642,213 a year.
Mr Beehag said buyers had been buoyed by the strong performance of some retail stores during the COVID-19 lockdown periods.
“I would say that COVID has shown that supermarkets and liquor stores have been incredibly resilient,” he said.
A drive-through bottle shop and attached hotel in Ingham, in North Queensland and leased to ALH Group’s BWS, also attracted strong interest from bidders at the auction.
The property, at 43-49 Herbert Street, which is leased to BWS on a 15-year lease to 2034 with options to 2084, sold for $1,965,000.
It is currently generating a net annual income of around $97,000 a year.
A bottle shop in south Sydney’s Woronora Heights, leased to Porters Liquor until 2027 and generating $33,484 a year, sold prior to auction for $575,000.
Chasing ‘COVID-proof’ assets
A warehouse in South Nowra fetched the second-highest result of the day, selling to a Sydney-based investor for $9.25 million.
City-based investors had been attracted to the regional asset, completed earlier this year, because of the length of the lease and its use as a food distribution centre.
“The big attraction was a new 12-year lease which commenced yesterday,” My Beehag said.
“It’s a food distribution and logistics warehouse but also has a wholesale retail component to it as well – again, it was seen as being pretty much COVID-proof.”
The property is leased to V&C Foods until 2032, with options to 2057. The property is generating a net annual income of $600,000, with 3 per cent annual rental increases.
Dan Murphy’s sale breaks Burgess Rawson’s own record
The popularity of bottle shops isn’t restricted to NSW or Queensland, with Burgess Rawson’s Melbourne office reporting a record-breaking result for regional property yields following the sale of a Dan Murphy’s asset in Wangaratta.
The $8.1 million sale of the freehold property to a Melbourne-based family purchasing through their self-managed super fund came six days after it was listed to market.
The sale reflected an initial yield on net base rent of 3.68 per cent. Factoring in estimated turnover rent,
the property is predicted to return a yield of 4.34 per cent.
“The property sold in just six days,” Burgess Rawson director Billy Holderhead said.
“In that time, we introduced the property to seven investors, three of whom submitted executed contracts above the asking price for the vendor’s consideration.”
Mr Holderhead said that the result reflected the high level of demand for properties leased to non-discretionary retailers.
“We have seen demand for freehold investments leased to non-discretionary businesses build over the last 12 months, in particular with private ‘mum and dad’ investors and family offices looking for the security and long-term returns that commercial property provides.”
According to Burgess Rawson the previous record regional cap rate of 4.72 per cent was set by another Dan Murphy’s store sold by agency in Queanbeyan, New South Wales in 2015.
This story has been updated to include the Wangaratta sale result.