This article is from the Australian Property Journal archive
INVESTORS sunk their teeth into tens of millions of dollars’ worth of fast food restaurants yesterday, which included the $12.825 million sale of a McDonald’s as part of developer Griffith Group’s Warrawong complex sell-down.
The Burgess Rawson auction held in Sydney saw more than $77 million change hands from 15 of the 18 offered properties selling on the day, for a 77% clearance rate.
Griffith Group was selling down a fistful of assets within its Bayview Centre in Warrawong, nine kilometres south of Wollongong, and netted $31.75 million of sales on the day. Those were headlined by the McDonald’s, which is on more than 3,000 sqm of land and traded on a 4.1% yield with a renewed 20-year lease to 2040 plus option.
Three neighbouring assets all completed in 2023 also sold. The Hungry Jack’s sold for $7.6 million at a 4.01% yield with a brand-new 15-year lease plus options; the Starbucks sold for $6.2 million at a 4.65% yield, with a 20-year lease to 2043 lus options; and the Oporto, which sold for $5.1 million showing a yield of 4.8% from its 12-year lease with options.
“The results highlight the absolute confidence in the stability of premium commercial properties, underscored by long-term secure leases to national and global tenant covenants in strategic main road locations,” said Burgess Rawson partner Yosh Mendis.
Commercial property investors splurged more than $136 million on fast food assets in FY24, as the security attached to giant names such as McDonald’s and KFC drew buyers in huge numbers, forcing yields down. At a time of softening numbers elsewhere, cap rates in the sub-sector firmed from 4.46% to 4.42%, with regional assets typically trading on sharper yields than their metropolitan counterparts.
The fully-leased Bayview Centre was completed by Griffith Group last year and spans 36,049 sqm, which more than 77,000 cars pass each day. In addition to the fast food tenants, Bayview Centre is occupied by national retailers including Beacon Lighting, Super Cheap Auto, JB Hi-Fi, Trek, Autobarn, RTM, and Amart Furniture.
Also at yesterday’s Burgess Rawson auction, Mendis and Michael Vanstone sold the Guardian Early Education centre in Coogee, in Sydney’s sought-after eastern suburbs, for $7.21 million, reflecting a 4.59% yield. National operator Guardian has a 20-year lease to 2039 with a 10-year option.
A rare vacant service station and fast food complex in Casula, in the south-west of Sydney, sold for $8.2 million. The 1,884 sqm freehold landholding has 43.8 metres of frontage to the Hume Highway and is close to McDonald’s, Guzman Y Gomez and an Ibis Hotel.
A Bridgestone and Supacheap Auto in the Hunter Region’s North Rothbury exchanged for $6.31 million reflecting a yield of 5.49%. The tenants have respective brand-new 10 and eight-year leases at the 2,500 sqm site.
The event moves to Melbourne’s Crown Casino today, where fast food, medical and childcare centre assets will be up for grabs.
