Fife Capital sells Smeaton Grange warehouse for record low yield
Fund manager Fife Capital has offloaded an industrial property on a net yield of 5.24 per cent – a record for the industrial sector in Sydney’s southwest.
The warehouse with a showroom and office at 43 Dunn Road, Smeaton Grange, sold for $7.15 million under the hammer at Burgess Rawson’s Sydney portfolio auction on Tuesday.
Fife Capital bought the property for $1,155,260 from Investa in 2014 – reaping in more than six times its value in less than four years.
Selling agent Michael Gilbert, from Burgess Rawson, who had the listing with Jamie Perlinger, said four bidders fiercely competed for it.
“It went off like an absolute firework. They went wild for it,” Mr Gilbert said, adding that more than 50 bids were made for the property.
“There were three of four people who really wanted it and obviously, it’s always two people in the end. They both really, really desperately wanted the property.”
In the end, a private investor from the eastern suburbs was the last one standing, after the price went up by some $300,000 in $10,000 increments.
The location and the land were the key reasons behind the competition.
“There’s 30,000 odd new homes going up around there, it really is the growth area,” Mr Gilbert said.
“It’s got easy access, not just to Port Botany, but to Port Kembla and the new (Badgerys Creek) airport; this is important for distribution.”
The 4949-square-metre site is on a 10-year lease until 2025 with a five-year option to the ASX-listed CSR Limited, which pays all outgoings. It earns $374,746 a year.
“It would be hard to believe the tenant would move out, they’re doing extremely well. I would’ve been happy to own this one,” Mr Gilbert said.
The agent added that industrial property “is the hottest sector” at the moment.
“The one thing you can say about any online purchase is that at some stage, it’s going to be in at least one warehouse. That’s the story here: the value that was previously in retail is leeching into the logistics and distribution space as people’s lifestyle and shopping habits change.”
The Smeaton Grange property was one of 27 to go under the hammer at the portfolio auction, which recorded a 60 per cent clearance rate. It sold for the highest price at the auction on the day.
The lowest yield was achieved by a service station in Jerrabomberra, NSW. That sold for $1.47 million on a 4.87 per cent return.
A retail property at A3, 118 Terry Street, Rozelle sold for $700,001 to a phone bidder, who put in a $1 bid at the last minute after a vendor bid of $700,000 was made.
