Larry Schlesinger, 08 December 2015

Investors stocked up their Christmas hampers with commercial property goodies as the final Sydney Burgess Rawson portfolio auction of the year yielded nearly $65 million in sales and an 80 per cent clearance rate.

While this was not quite the 92 per cent clearance rate achieved at the start of the year, investor appetite remained strong for well-located commercial and retail property backed by strong lease covenants with 20 out 25 properties selling under the hammer of auctioneer David Scholes.

Selling agents Burgess Rawson counted more than 200 people in attendance at the Sofitel Wentworth Hotel when all eight commercial buildings put up for sale by the NSW state government sold following strong bidding in the room.

The properties, all located in regional centres outside of Sydney and leased to tenants such as Services NSW and Roads and Maritime Services offering brand new five-year leases with fixed annual rent increases, added almost $17 million to state government coffers.

They sold on yields ranging ranging from 4.3 per cent for a Motor Registry office in Mittagong in the Southern Highlands, which sold for $1.88 million, to 6.7 per cent for a Motor Registry office in Wollongong, which sold for $3.34 million.

A Sydney buyer paid $5.71 million on a yield of 5.9 per cent for a Motor Registry office in Penrith, 50 kilometres west of Sydney.

Burgess Rawson selling Michael Gilbert said the 100 per cent clearance rate achieved for the state government portfolio was a  vote of confidence in the broader economy of NSW.

“Government rent cheques don’t bounce,” said Mr Gilbert.

Also at the auction, a retail property in Armidale in the NSW Northern Tablelands comprising a Woolworths-owned Dan Murphy’s liquor store and a Dick Smith electronics outlet, on 15 and 10 year leases respectively, achieved the highest price under the hammer, selling for $8.1 million on a 6.9 per cent yield.

A company-owned Hungry Jacks in Port Macquarie sold for $4.08 million on a 5.1 per cent yield alongside a Caltex Woolworths petrol station in Erina ($6.6m), two Shell Coles Express service stations in Coffs Harbour ($6.2m) and Griffith ($1.93m) and a 7-Eleven service station near the University of Newcastle ($4.55m).

Properties passed-in included an ANZ Bank branch near Manly, an IGA supermarket in Harden and a tobacconist shop and whole office floor in the Sydney CBD.

Extracted in full from the Australian Financial Review.