Bidding wars for bakery and vet as investors chase affordable assets

“We had buyers in the room from Queensland who were prepared to bid at $9.8 million to $9.9 million, but the vendor raised their reserve price to more than $10 million,” said Ingrid Filmer, managing director of commercial agents Burgess Rawson, which hosted the auction at Melbourne’s Crown Casino.

Auctioneer David Scholes told bidders the vendor – which a title search identifies as Sydney-based Theo Wondal – would not accept a bid below $10.2 million, as he passed the property aside.

Mr Wondal’s Tori Holdings paid $9.61 million in 2021 for the 4687 square metre site leased to the Sunbury Ford dealership with the deal struck back then on a 5.2 per cent yield.

“The reserve was set very, very late, and it did not meet where the market was,” Ms Filmer said.

However, in the sub-$2 million range, there is a much deeper pool of buyers for properties in good locations and with strong tenants locked in. Many of these investors pay with cash and are seeking a secure income stream rather than worry about interest rate settings.

“For these assets, yields are still holding at under 5 per cent,” Ms Filmer said.

A case in point was a 154 square metre company-owned Bakers Delight store in Rosanna that the family-owned bakery business (with more than 700 stores) has operated for about 40 years.

It generated 42 bids – starting at $800,000 – before selling under the hammer to a local investor for $943,000 on a net yield of 3.9 per cent (45 basis points below the cash rate).

Equally sought after was a veterinary hospital in Pascoe Vale in Melbourne’s north-east leased to VetPartners, which is owned by Swedish private equity giant EQT.

The 260 square metre clinic on a 994 square metre site generated 52 bids before selling for $1.705 million on a yield of 4.5 per cent.

Another Vet Partners hospital in nearby Moonee Ponds sold for $1.35 million on a 5.1 per cent yield, though it took just two bids to get the sale over the line.

In total, Melbourne’s auction generated total sales of just under $25 million and a clearance rate of 60 per cent. Other properties to sell under the hammer included a Grill’d restaurant in Perth’s Subiaco ($1.847 million on a 5.6 per cent yield) and the electoral office of Victorian Energy Minister Lily D’Ambrosio in Mill Park in Melbourne’s north-east ($940,000 on a 6.6 per cent yield).

On Tuesday, a Burgess Rawson auction in Sydney was a sellout as $27.41 million of assets changed hands.

The standout result was an Affinity Education childcare centre in Killara (offered by Charter Hall) which sold for $7.78 million on a 4.1 per cent yield after five investors competed for the property.

“We continue to witness robust demand for high-quality investment opportunities in prime locations such as Killara,” said selling agent Michael Vanstone from Burgess Rawson.