Investors spend $75m largely on pandemic-proof assets

Investor appetite for securely-leased commercial investments remains strong as buyers chase commercial assets that deliver steady incomes.

The high levels of demand can be seen in the $520 million of unsatisfied capital looking for new commercial opportunities following Stonebridge Property Group’s national portfolio auction, according to partner Michael Collins.

“Despite ongoing rhetoric in relation to likely interest rate increases, the sheer weight of capital seeking quality investments is keeping the market incredibly buoyant. We expect this to continue for some time,” he said.

Pandemic-proof assets such as childcare centres, a supermarket and fuel stations dominated the eight properties sold at the company’s inaugural portfolio auction for a combined $75 million.

A freestanding Coles supermarket in Lalor in suburban Melbourne, which included a Liquorland store, was one of the key assets up for grabs.  The 2783sqm store sold for $13,768,888 on a 2.98% yield to a group of private investors with Asian heritage.

Stonebridge Asia Practice partner Kevin Tong said investors, particularly those based in Asia, were attracted to the steady income the property offered.

“Since the opening of international borders in February, demand from Asian investors, especially for blue chip investments, has continued to grow with demand not only coming from China, but other parts of Asia including Hong Kong, Singapore, and Vietnam. Over 25 offers were sourced via our Asia Practice across the wider portfolio,” he said.

Three childcare centres in Queensland sold at the auction for a combined $25 million to private investors including the Little Locals centre in the Brisbane suburb of Auchenflower, which sold for $11,050,000 on a yield of 4.52%.

Little Locals centre in Auchenflower, Brisbane, sold on a yield of 4.52%. Picture: Supplied by Stonebridge

Another childcare centre operated by the Little Local group in Westbrook, Toowoomba, sold for $8,677,000 on what Stonebridge said was a record low yield in regional Queensland of 4.80%.

Part of the appeal of resilient childcare assets comes from the $12 billion allocated to the sector in government subsidies, said Stonebridge partner Tom Moreland.

“This, coupled with the long-term lease fundamentals of the freehold investments, providing an annuity style income stream, has driven yields to all-time low levels,” he said.

The sector is tipped to see an increase in funding on the back of the newly-elected Labor government’s campaign promise of making childcare cheaper for families earning less than $530,000 a year.

An Early Settler furniture store in Blackburn sold for $12,100,000 on a yield of 4.05% and a Shell Coles Express in Ipswich sold for $7,650,000 on a yield of 5.60%.

National furniture retailer Early Settler has occupied the Blackburn site for 14 years. Picture: realcommercial.com.au/for-sale

A medical freehold commercial property leased to National Dental Care in Townsville sold for $3,600,000 on a yield of 5.12%.