Investors keen on childcare, liquor and fast-food at portfolio auctions

The appetite for pandemic-proof assets keeps growing with essential services such as childcare centres, liquor and fast-food outlets proving irresistible to investors who splashed out almost $217 million for a suite of properties over three days.

Burgess Rawson’s November portfolio sales hit new records with 251 registered bidders jockeying for 61 properties around Australia. Of those, 47 sold (including six prior to auction) – a 77% clearance rate with blended yield of 5.08% – for a total of $216,964,300.

The three events, in Sydney on 9 November, Brisbane on 10 November and Melbourne on 11 November, came hot on the heels of New South Wales and Victoria emerging from lockdown and Australia preparing to reopen its borders.

Sales surpassed Burgess Rawson’s September portfolio results by a considerable margin, reflecting an increase in confidence as Australia emerges from two years of COVID-19 restrictions.

National head of agency Adam Thomas was delighted with the outcome.

“It’s a phenomenal result,” he said. “There’s more focus on quality, essential services and that’s reflected in the sales.”

Highlights of the auctions included:

· Fierce competition for two alcohol outlets – a Liquorland at Woonona near Wollongong and a First Choice Liquor in Maroubra – both selling well above reserve for $2.51 million and $10.17 million respectively, and both going to local investors.

· A Queensland private investor paying $4.93 million for a KFC in Berrinba, south of Brisbane, in a deal that resulted in a yield of 3.53%.

· Five childcare centres in the Melbourne portfolio fetching almost $45 million combined.

While high-profile brands such as KFC, Coles, Woolworths, Dan Murphy’s, Liquorland, IKEA and Kmart headlined the line-up, it was childcare holdings that focused bidders’ attention.

Childcare centres lead the way

Bidders at the Melbourne auction. Picture: Burgess Rawson

Childcare assets proved extremely popular, with 10 of the 12 assets in the portfolio selling for a combined $69,612,000 with a blended yield of 4.98%.

It was the largest line-up of childcare assets Burgess Rawson had ever brought to market, said Mr Thomas.

The best result was for an Advance Childcare at Wantirna South in Melbourne’s east, which fetched $12.77m, reflecting a 4.4% yield.

A new childcare complex at Pascoe Vale South in Melbourne’s northern suburbs sold for $12.52m, at a 4.36% yield, while a Kids Club at Bulleen in Melbourne’s northeast went for $11.35 million for a 5.2% yield.

Mr Thomas said these were among the lowest yields recorded for childcare assets above the $10 million mark.

An Imagine Childcare and Kindergarten in Dubbo in regional NSW sold for $7.6 million with a 5.6% yield, while the Owl and Pussycat Preschool at Warriewood on Sydney’s northern beaches sold prior to auction for $4.6 million with a 5.86% yield.

Brisbane’s best childcare centre result was a Journey Early Learning at Banyo in the city’s north, which sold for $4.6 million for a 4.69% yield, while the Petit Early Learning at Marian, near Mackay, in north Queensland, fetched $4.75 million for a yield of 5.66%.

PropTrack economist Anne Flaherty said the popularity of childcare assets was hardly surprising given 2021 had been a record year for childcare sales.

“And every sign points to demand for these assets remaining strong,” Ms Flaherty said.

User activity on realcommercial.com.au showed there was very strong interest from buyers in childcare, along with other essential services, she said.

Buyers lap up alcohol assets

One of those essentials was the liquor industry, with bottle shops and pubs attracting keen buyer interest over the three days.A standout result was for First Choice Liquor in the surf suburb of Maroubra in Sydney’s east.

A private investor who lives in the area waved off 14 rival bidders to secure the outlet for a shade over $10 million, at a 3.43% yield.

It was the best yield ever achieved for a First Choice liquor property and the second-best yield for a large format liquor asset across Australia. The previous First Choice Liquor record was held by a First Choice outlet in Werribee, Victoria with a 4.1% yield, which sold in 2019.

Auctioneer David Scholes pictured at the Melbourne auction. Picture: Burgess Rawson

The record for a large format liquor investment is held by a Dan Murphy’s in Alphington, Victoria that sold in 2014 for $7.9 million on a yield of 3.32%. Although, that sale included a Dan Murphy’s corporate office upstairs; a seven-year lease (compared to five at Maroubra); and 3% rent increases (compared to 2% rent increase at Maroubra).

The Maroubra sale did beat two previous Burgess Rawson results – Dan Murphy’s at Wangaratta, Victoria that achieved a 3.68% yield in 2020; and Dan Murphy’s at Gladesville in NSW that achieved a 3.8% yield in 2015.

Another big result was for the Liquorland at Woonona on Wollongong’s northern fringe, where 20 buyers competed before a Sydney-based investor, who had registered as a bidder just 10 minutes before the auction, won with a bid of $2,510,000 with a 3.75 % yield.

The biggest price was for a Dan Murphy’s at Dickson in the ACT which sold for $15,160,000, with a yield of 4.25%.

One liquor asset that surprised onlookers was the Pacific Pines Tavern on the Gold Coast, which failed to sell despite with a 15-year lease held by ASX-listed Endeavour Group.

Regional properties power on

Fast food was more appetising to bidders, with a Hungry Jack’s at Dalyellup in Western Australia selling for $5,715,000 with a yield of 3.81%.

A Domino’s at Surfers Paradise fetched $1,395,000 on a 4.44 % yield, while a Subway in Latrobe, Tasmania went for $1 million with a 4.57 % yield.

Indeed, regional areas were attractive to buyers, with assets in rural Victoria including a childcare centre in Bendigo, a Kmart in Cobram, and bank branches in Swan Hill and Leongatha, along with a medical centre in Port Lincoln, South Australia attracting strong bids.

In Brisbane, the biggest result of the day was a 4600-square-metre industrial property in Townsville on a 15-year lease to steel giant BlueScope Group, which sold for $11.5 million on a 6.25% yield.