This article is from the Australian Property Journal archive
A MELBOURNE-based investor has purchased the Priceline Pharmacy building in the Sunshine Coast suburb of Caloundra for $2,875,000, marking the third time lucky for the vendors after valuations of the property came in below previously agreed sale prices.
The asset was marketed and sold by Ray White Commercial’s Stephen and Elliot Kidd, in conjunction with Henzells Commercial Real Estate’s Paul Bell.
Stephen Kidd said the Melbourne investors – one of over 200 to make enquiries during the expressions of interest campaign – bought 66 Bulcock Street as their first Queensland asset and were now looking for more health-related assets.
The property is entirely leased to Star Pharmacy Group Pty Ltd with a current net income of $166,340 each year from a fresh five-year corporate lease with options until 2045.
Stephen Kidd said that whilst there was plenty of inquiry, a combination of the Banking Royal Commission combined with COVID has left banks and in turn, valuers, more conservative than has historically been the norm.
“As a result, we ended up having to sell the property three times – each time we would get to the valuation stage, but the valuers would value it substantially under the agreed sale price.
“In the end, our take-away lesson was to ensure that the purchaser wasn’t stretching their financial resources to acquire the property, and that they understood a higher equity contribution was more than likely to be required.”
Elliott Kidd said appointing a specialist valuer who “understood the asset class was also more appropriate than working with a generalist who didn’t understand the retail sector or the occupancy costs attached to differing sub-categories of tenant”.
“It was frustrating, especially when the Star Pharmacy Group is a national tenant with over 50 stores, and had a very low occupancy cost – but was being compared to mum and dad retail operations.
A complementary business is now being sought to occupy the upstairs area, one that would be attracted by the pharmacy’s business downstairs and customers attracted to the adjoining medical centre, Kidd said.
“Preferably a business in the health sector, looking for low-cost accommodation in the main street of Caloundra.”
