Private investors shunned government-tenanted buildings in regional towns and instead snapped up petrol stations and childcare centres at a commercial property auction held in Sydney on Tuesday.

Of the 10 properties offered for sale by real estate agents Burgess Rawson, seven sold under the hammer for a combined $23 million and a clearance rate of 70 per cent.

The big winner was Financial Review Rich Lister Russell Withers’ 7-Eleven chain, which sold a petrol station and convenience store in Penrith in western Sydney for $4.95 million on a tight yield of 3.7 per cent.

The property on a corner site of more than half a hectare came with a new 12-year lease to 7-Eleven and fixed 3 per cent annual rent increases.

The Penrith 7-Eleven sold on a strong yield of 3.7 per cent. 

Also selling was a United petrol station and Pie Face store in Gladstone, backed by a 15-year lease. It sold for $5.68 million on a yield of 5.5 per cent. The vendors were Gold Coast-based investors Catherine and Matthew O’Brien.

“We identified a dozen or more separate parties who were bidding on the Penrith 7-Eleven site, due to its proximity to Sydney Airport and the fact it is now considered a main hub of the city,” said Burgess Rawson selling agents Simon Staddon and Billy Holderhead.

“The tight yield of 3.7 per cent is likely a post-COVID record for a single tenant investment and that circa $5 million price point is extremely strong as private investors are looking to bank their money.

“People who were bidding to sub 4 per cent [yield] left our auction rooms feeling disappointed, and that would surprise a lot of people during a pandemic.”

However, a Centrelink building in Woy Woy on the NSW Central Coast was passed in for $4.8 million and a building in Orange leased to government-funded employment and training provider Verto failed to secure any bids.

Both childcare centres on offer sold under the hammer – a North Parramatta Montessori centre fetched $4.251 million on a yield of 5.2 per cent and a Goodstart Early Learning Centre on the Gold Coast sold for $1.852 million on a yield of 6.7 per cent.

A Wollongong industrial site leased to Actrol, a subsidiary of Reece Group, sold for $3.17 million on a yield of 4.4 per cent, while an estate agents office in Shellharbour sold for $1.275 million on a yield of 5.5 per cent.

Extracted in full from: https://www.afr.com/property/commercial/investors-shun-government-leases-for-petrol-stations-and-childcare-20201027-p568xq