From Coonabarabran to Wagga: Investors go bush for commercial property
A pharmacy in Coonabarabran, a tyre and auto centre in Wagga Wagga, a grocer and cafe at Wisemans Ferry on the Hawkesbury River, and a childcare centre on the Central Coast all sold at a portfolio auction in Sydney on Tuesday as investors saw good buying opportunities in regional areas.
Highlighting this appetite, a chemist in Coonabarabran – a small town 500km north-west of Sydney known as the “astronomy capital of Australia” – generated more than 120 enquiries and sold before auction to a local pharmacist for $715,000 on a 6.15 per cent yield.
“It was madness. We did not expect such a huge response,” said Kieran Bourke from agent Burgess Rawson, who put together the portfolio auction.
Mr Bourke said multiple registered bidders had turned up to bid for the pharmacy, only to leave empty-handed. “The buyer came through with an offer well above the reserve,” he told The Australian Financial Review.
“They know the chemist well. It gets a lot of repeat business from people coming out of nearby medical centres with prescriptions.”
Part of Alliance Pharmacy, one of Australia’s largest independent pharmacy operators, Coonabarabran Chemist sold with a five-year lease in place, renewal options to 2038 and fixed 4 per cent annual rent increases.
In East Wagga Wagga, a tyre and auto commercial centre leased to retailing giant Bridgestone also sold before auction for $3.95 million on a yield of 5.9 per cent.
The buyer was a NSW investor who had inspected the property “from the outside” and had been keen to buy it from “day dot”.
“There was really strong interest – around 55 enquiries. It’s on a massive block of land in a thriving industrial precinct. It’s an underutilised site that could support multiple dwellings,” Mr Bourke said. “It sold just prior to the auction kicking off.”
In total, almost $23 million of property sold on the day – including investments that sold under the hammer and before auction. The clearance rate was 80 per cent.
Among those to sell under the hammer were a grocery store and cafe on the northern outskirts of Sydney at Wisemans Ferry on the Hawkesbury. It generated lots of bidding before selling for $2.39 million on a 6.74 per cent yield.
A childcare centre in Budgewoi on the NSW Central Coast with a lease to Milestones Early Learning Centre, part of the Affinity Education Group, sold for $3.2 million on a 4.74 per cent yield.
A retail outlet in Tumut in the NSW Riverina featuring a BWS liquor store (part of ASX-listed Endeavour Group) and a Reject Shop – both with five-year leases in place – sold for just over $2 million on an 8.9 per cent yield.
Not everything in the regions sold. A KFC restaurant in Moss Vale in the Southern Highlands was passed in on a yield of 4.34 per cent, while two KFCs in Young and Bathurst were withdrawn.
The biggest sale of the day was a Viva Energy petrol station and convenience outlet in Greenway, Canberra that sold for $9.05 million on a 5.5 per cent yield.
It was offered with eight years remaining on a 10-year lease to Viva Energy Australia and with a new convenience offering called Reddy Express.
Selling agent and Burgess Rawson ACT managing director Guy Randell said three bidders had fought for the petrol station, including two Canberra investors. The winning buyer was one of the Canberrans, while the vendor was a local family.
“It’s a very strong outcome for a fuel asset, especially in Canberra. The property is on a prime town centre site and a lot of adjoining landowners were interested in it,” Mr Randell said.
He said the Canberra commercial property market was strengthening. “We are getting some great results in childcare and all kinds of investments, which are setting records in sales value and yields,” he said.
