This article is from the Australian Property Journal archive
AGENTS Cushman & Wakefield’s September portfolio auction saw investors buying up nearly $44 million in assets, for a 100% clearance rate.
$43.8 million worth of commercial properties were sold, with portfolio assets selling for a combined almost $4.6 million above their reserves, across childcare, fast food and healthcare properties.
“The market for alternative assets is continuing its stellar run since the beginning of 2020 as investors’ hunt for yield remains insatiable,” said Michael Collins, head of national investment sales at Cushman & Wakefield.
The most significant sale throughout the auction was the Lilyfield Early Learning Centre, which went for $14.35 million on a record 3.83% yield.
The childcare centre was one of the first in inner city metro Sydney, sitting 3km out from the CBD, to be up for grabs in years and drew further interest due to its $550,000 per annum income and 20-year lease term.
“Childcare centres continue to be at the top of investors’ wish lists, underscored by a raft of government support and strong fundamentals in the COVID-19 era,” said Tom Moreland, associate director at Cushman & Wakefield.
“Our team has now sold well over $200 million in childcare centres since the beginning of the pandemic and have seen yields drop significantly lower, with strong compression for both metro and regionally located assets.”
Another childcare centre, located 13km out of Brisbane in Darra, was purchased for $7.75 million, again at a record yield of 4.9%.
Furthermore, a G8 Education centre in Cessnock, NSW was sold prior to auction, bringing in $6 million, reflecting a 5.12% yield.
“The fact that two properties sold prior to auction then 100% of the remaining assets traded on the day shows how strong demand really is. With the number and appetite of underbidders, we don’t see that trend slowing anytime soon,” added Collins.
The most significant fast food property on offer brought in $4.7 million for a 3.77% yield, with the Taco Bell sitting in the core retail precinct of Tamworth, NSW.
A Hungry Jacks was also sold in NSW, with the Muswellbrook property on the New England Highway generating $3.4 million, reflecting a 4.5% yield.
In Mackay, a Gloria Jeans and Subway anchored fast food and retail centre with a WALE of 5.2 years and an annual return of $238,878, garnered $3.9 million for a 6.05% yield.
Lastly, in the Sydney healthcare precinct the NAB Business Banking Centre and the Centre for Gastrointestinal Health building which brings in an annual net income of $155,200, sold for $3.6 million on a 4.25% yield.
“The assets on offer all provided exceptional tenant covenants to brands that have traded well despite COVID-19 restrictions, with fast food and healthcare remaining standout performers. Given interest rates are expected to remain low for some time, we expect the market to continue to perform well into next year and beyond,” concluded Yosh Mendis, associate director at Cushman & Wakefield.
