Dan Murphy’s sells on record yield

A Dan Murphy’s in Wangaratta has broken the yield record for a regional large format liquor store, as investors seek out safer retail assets.

The liquor outlet in the country Victorian hub sold for $8.1 million within six days of being listed, on an initial yield of just 3.68% in one of the sharpest results in the industry this year and a national record for country liquor properties.

The previous record was held by another Dan Murphy’s store in Queanbeyan, New South Wales, which set the benchmark of 4.72% in August 2015.

The new owner of the Wangaratta asset at 7-9 Baker St – a self-managed super fund vehicle of a Melbourne-based family – is expected to receive a return of around 4.34% once the property’s ‘turnover rent’ is factored in.

Burgess Rawson Director Billy Holderhead, who facilitated the sale, says it demonstrates the pent-up demand for commercial property investment leased to major national retailers.

“The property sold in just six days,” Holderhead says.

“In that time, we introduced the property to seven investors, three of whom submitted executed contracts above the asking price for the vendor’s consideration.”

Holderhead says that the result speaks to the current market sentiment.

“We have seen demand for freehold investments leased to non-discretionary businesses build over the last 12 months, in particular with private ‘mum and dad’ investors and family offices looking for the security and long-term returns that commercial property provides.”

The three bidders who competed for the Dan Murphy’s were all underbidders from a number of Woolworths, Coles and Wesfarmers properties offered through Burgess Rawson over the past 12 months, which Holderhead says is evidence of further unfulfilled demand.

“Essential service businesses have been well-placed to benefit from community lockdowns,” he says.

“Dan Murphy’s and BWS, for instance, reported a 21.4% revenue increase in the first 10 weeks of the June quarter. Buyers were aware of the tenant’s success through the pandemic and they recognised the ‘defensive’ qualities of the opportunity.”

Burgess Rawson’s next Investment Portfolio Auction will be held next Wednesday, September 23 in Sydney, and via an online auction process.