Banks in demand at portfolio auctions
Investors took their money to the banks at the latest Burgess Rawson portfolio auctions.
After $29 million worth of commercial property changed hands at the agency’s Sydney auction on Tuesday, two regional banks were the standout performers amid mixed results in Melbourne on Wednesday.
Thirteen properties sold in Melbourne for a clearance rate of 67%.
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A prominent Bendigo Bank at Albury on the NSW-Victoria border attracted the strongest result, selling for $2.9 million on a 4.83% yield.
The 1090sqm building, over three levels and including a substantial landholding, saw heated competition from 10 bidders before falling to a Sydney investor.
The Bendigo Bank at Albury in New South Wales.
A Commonwealth Bank at Shepparton in regional Victoria also saw significant interest, trading for $3.6 million on a 5.62% yield.
And a Bank of Queensland-leased premises at Gympie in Queensland went for $825,000 on yield of 8.87%.
Meanwhile, a Shell/Coles Express service station eclipsed the $4 million mark, with its 6.45% yield the last of the sub-7% results.
An opportunity to secure a rare ‘net lease’ for a Commonwealth Government-leased property at Albury helped it achieve the day’s highest price, topping out at $5.1 million.
Interest in childcare centres was uncharacteristically subdued, with a facility leased to Treasured Tots at Brahma Lodge in South Australia the only one to sell. The hammer fell at $2.5 million, representing a yield of 7.44%.
A pair of Subway restaurants at Ararat in Victoria and Proserpine in Queensland also changed hands, with the Ararat property also including a liquor store and selling for $810,000, while the Queensland store went for $1.25 million. Both had yields in the low to mid-8% range.
The Treasured Tots childcare centre at Brahma Lodge.
Burgess Rawson director Shaun Venables says
“Our auctions are used by many as a barometer for how the market is performing. Today’s result further reflects that there is still demand for quality commercial property assets. With a few very near misses today, we are confident that by the close of the week, well over 80% of the properties offered will be sold, Venables says.
“Market conditions are changing. Banks are getting stricter on their lending criteria and loan to value ratios have reduced. As has been widely predicted for some time, interest rates are potentially on the rise in the near future. Residential markets in Sydney and Melbourne are slowing down and the stock market is experiencing turbulence.”
“In these conditions we see investors lean towards passive commercial investment opportunities which tend to offer a good ‘term certain’ on the lease, high calibre tenants and recoverable outgoings. These types of commercial assets give investors a level of comfort, because they can see and touch them.”
