Boring and dependable is the new black for real estate investors

The auction extravaganza, when completed, will have put more than 60 properties under the hammer over three days.

Burgess Rawson’s Billy Holderhead said the Melbourne event registered 189 bidders across 21 properties for sale, providing a level of pent-up-demand among investors that pushed the total price of all assets 11 per cent above the vendors’ combined reserve of $75 million.

“Boring income streams are what everyone is chasing,” Mr Holderhead said. “There’s a lot of frustrated money sitting in banks returning under 0.5 per cent interest that is looking for a new home.”

That reliable income is being delivered by real estate leased to essential businesses like the Kingston Funerals home in Cheltenham, which sold to a Melbourne investor for $3.83 million on a yield of 3.78 per cent after buyers lobbed a vigorous 69 bids.

Another property leased to Coates Hire in South Australia’s Albert Park went for $16.1 million on a yield of 3.59 per cent. Two childcare centres in South Australia sold prior to the event.

Many of the properties were purchased sight unseen by interstate buyers, including the Sunbury Ford dealership which was snapped up by a keen Sydney investor for $9.61 million. That same investor purchased two commercial properties in Tasmania in a separate deal in May for a combined $4.62 million.

Twenty of the 21 properties that were on offer, sold, achieving an extremely tight blended yield of 4.64 per cent.

“To achieve that kind of blended yield, that’s stronger than anything we’ve seen before,” Mr Holderhead said.

Most of the buyers were not professional property investors, but business owners or individuals who were focused on simple, long lease terms, net rent and increases in income over time, he said.

The super-size auction will cover two other events in Brisbane and Sydney this week with a similar choice of supermarkets, petrol stations, childcare centres and auto parts outlets up for grabs.

The remaining 32 assets on offer are expected to fetch up to $115 million.

The success of the online auctions will lead to it being incorporated in all future Burgess Rawson portfolio auctions, events usually characterised by throngs of buyers crowded into a cavernous auction room intent on a booming auctioneer’s voice up front.

In a separate deal, the Dexus-managed listed APN Convenience Retail REIT has exchanged contracts to buy Warrego Highway Travel Centre in Queensland, and conditionally exchanged contracts to acquire Dubbo Service Centre, NSW, for a combined $24 million.

Warrego is a purpose-built travel centre constructed in 2019 and is 100 per cent occupied, with the site leased to major tenants Ampol and the hamburger business Carl’s Jr.