Hungry Jack’s and childcare lead the way on big auction day

Childcare, fuel and fast food dominated more than $38 million worth of sales at Burgess Rawson’s Investment Portfolio Auction in Melbourne on Wednesday.

With 11 of 12 properties selling at a clearance rate of 92%, the auction event marked one of Burgess Rawson’s most successful campaigns of 2019.

The sale of six childcare centres within 24 hours at the agency’s two auction events in Melbourne and Sydney highlighted the ongoing demand for the rapidly rebounding asset class.

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All four childcare centres on offer in Melbourne were snapped up – two prior to auction – in addition to two that sold at the Sydney Portfolio Auction on Tuesday.

A property leased to Green Leaves Early Learning at Ashgrove in Queensland achieved the lowest yield for a Brisbane childcare centres in two years when it was bought prior to auction for $4.5 million on a 5.09% yield. Another centre just moments from the beach at Southport on the Gold Coast also saw a deal finalised before auction day for $4.5 million, on a yield of 5.87%.

The Ashgrove childcare centre was sold before auction.

A final bid of $4 million was enough to own an asset leased to fast food giant Hungry Jack’s in the Victorian border town of Wodonga, which saw the auction event’s tightest yield of 4.98%.

A Caltex-Woolworths service station in the Ballarat CBD in regional Victoria attracted heated bidding, finally selling for $955,000 on a 5.24% yield, while a Shell service station leased to Viva Energy at Tocumwal in New South Wales also achieved a strong result of $1.665 million, representing a 6.9% yield.

Another Woolworths petrol outlet at Kennington, near Bendigo, sold after auction for an undisclosed price.

The Woolworths-Caltex service station at Ballarat.

Burgess Rawson director Shaun Venables says the auction results are yet another endorsement for the safety and security of commercial investments.

“Once again it’s further evidence of investors’ preference for bricks and mortar assets with strong lease covenants and assured rental growth,” Venables says.

“The fluctuating and sometimes volatile residential and share markets have been well reported, but passive, leased commercial investment properties have consistently been popular with investors because of their strong fundamentals.”

In other results, buyers saw the future development potential of a car wash at Blackburn in Melbourne’s east. The Sparklers facility at 129-131 Whitehorse Rd, which is leased to the company until 2027, traded for $4.685 million, on a tight 5.05% yield.

Major regional office buildings continue to be a popular choice among investors. A major Centrelink facility leased to the federal government and Property New South Wales at Bega generated significant interest, with 70 enquiries and four offers to purchase before auction. The winning offer of $5.025 was well in excess of initial price expectations of $4.4-$4.6 million.

The Centrelink at Bega in NSW.

A Colac building leased to Findex Group secured the auction’s highest price of $6.05 million.

A further two childcare centres in the Geelong region also sold strongly, with a Leopold property achieving $4.79 million, while another at Grovedale traded for $2.15 million.

Burgess Rawson childcare specialist Adam Thomas says interest in childcare is continuing to build in the second half of 2019.

“Childcare continues to be at the forefront of investors’ minds,” Thomas says.

Burgess Rawson’s next Portfolio Auctions will be held in Sydney and Melbourne on Tuesday, October 29 and Wednesday, October 30.