The cashed-up small investor market has shown no signs of easing, with a number of regional business premises snapped up at the most recent Burgess Rawson auction campaign.

Many of the assets included service stations and banks in rural areas and were bought at solid yields, reflecting demand for bricks and mortar in the current lower-for-longer interest rate environment.

Among the sales, a Caltex-branded service station at 337 West Street, Umina Beach, in NSW, sold for $3.52 million to a private investor on a tight yield of 5.2 per cent, and a St George-tenanted freehold bank investment at 125 Macquarie Street, Dubbo, went for $2.24 million on a yield of 6.42 per cent.

Caltex-branded service station at 337 West Street, Umina Beach, sold for $3.52 million.
Caltex-branded service station at 337 West Street, Umina Beach, sold for $3.52 million.

Other deals were a Harvey Norman-tenanted retail superstore at 5-9 Saleyards Road, Parkes, which was snapped up for $2 million on a yield of 7.5 per cent, and a 7 Eleven-branded convenience retail site at 85 Perth Street, Toowoomba, which was sold immediately after bidding closed. Price and parties were not disclosed.

Burgess Rawson director Dean Venturato said the auction sales reflected strong tenants and long-term leases.

“These auction results indicate astute investors are keeping their fingers on the market pulse and remain eager to capitalise on the current low interest rate environment to secure prime assets as they become available,” Mr Venturato said.

The auction attracted 86 registered bidders, with eight parties and more than 30 contracts registering for the Umina Beach Caltex.

“Across the board, we’ve seen investors focusing their search on strong regional locations, reliable tenants and quality lease covenants and terms – factors each of these sales were undoubtedly driven by,” Mr Venturato said.

Investors were drawn to well-leased investments, which typically command higher prices, but the buyers accepted a lower yield for quality assets, which offer higher security amid current uncertainties.

Mr Venturato said the large-format retail site in Parkes, tenanted by Harvey Norman for the past 25 years, sold for a price 54 per cent higher than when it last changed hands in 2015.

Extracted in full from: https://www.smh.com.au/business/companies/big-interest-in-small-business-pushes-up-deal-prices-20200806-p55j5x.html