'Affordable' Bunnings at Kempsey sells for $5.17 million
A private investor from North Sydney has snapped up a Bunnings Warehouse in the northern NSW town of Kempsey for $5.17 million.
The property, which is leased to the popular hardware chain until 2024 with options to 2049, was one of six to be put up for sale at the latest Burgess Rawson portfolio auction on Tuesday. All six sold.
Director of Burgess Rawson Darren Beehag said the Bunnings property had been particularly popular because of the 3 per cent annual rent increases built into the rental contract.
“For a Bunnings, it was affordable,” Mr Beehag said, adding that most stores typically sell within the $15 million range.
It was rare “to get a Bunnings covenant at that price with the 3 per cent annual increases, which most new Bunnings don’t have”, he said.
The property, which is currently generating rent of $344,364 a year plus GST, was sold on a yield of 6.66 per cent.
Bunnings Warehouses have a reputation as a popular asset with private investors, something Mr Beehag attributed to the lease conditions and the enduring popularity of the brand.
“The combination of net leases [where the tenant is responsible for all outgoings] and annual rent reviews make them a popular asset class and they’re generally high-profile sites as well,” Mr Beehag said.
The property, which started life as a Mitre 10, was converted to a Bunnings in about 2010 and was sold by the Bunnings Group to the current vendor for $3.25 million in 2012.
It won’t be the only store in the hardware chain to change hands this month, with the sale coming a week after expressions of interest closed for a new Bunnings Warehouse in Kingaroy, in Queensland.
Mr Beehag said a buyer had been successful with an offer of more than $14 million for the Kingaroy store, which only opened its doors at the end of May, with contracts likely to exchange within the coming days.
Other recent Bunnings Warehouse sales include a newly-opened store in South Australia’s Victor Harbor, which sold to a Melbourne-based syndicate for $21.3 million.
Mr Beehag attributed the 100 per cent clearance rate recorded at the latest portfolio auction, which came after successive months of sub-50 per cent results, to better political and economic conditions.
“It sounds simplistic, but with the federal election over and stability returning on the political front, combined with recent interest rate cuts and the prospect of more to come, it all bodes well for the commercial property market for the remainder of 2019. We’ve noticed that already with the uptick in inquiries.”
Other properties to sell on the day include a Woolworths service station in Unanderra on the NSW south coast, which fetched $2.35 million on a yield of 7.07 per cent.
A cafe and takeaway shop in the Gold Coast suburb of Paradise Point sold for $1.1 million on a yield of 6.09 per cent.
