Flagship KFC Mentone premises bought by Asian investor for $3.505 million

Two Asian investors have battled heartily for the premises of the KFC restaurant in Mentone in Melbourne’s southeast, but not before a sub-lease issue relating to the neighbouring Hungry Jacks eatery created some confusion among a packed room of bidders at Crown Casino.

The restaurant premises eventually sold for $3.505 million equating to a gross yield of around 6.5% based on rent of around $227,167 per annum.

Bidding started at $2.8 million with a handful of bidders competing but eventually became a contest between two Asian buyers with $5,000 increases in the final stages of bidding.

Earlier the auction of the restaurant, listed third as part of a Burgess Rawson portfolio auction of 12 properties, was pushed back to later in proceedings due to clarification sought over the contractual arrangement with Hungry Jacks.

Bidding resumed later in the morning after auctioneer David Scholes read out a statement from the vendor’s lawyers that Hungry Jacks has agreed free use of about half a dozen car parks and the driveway that form part of the KFC premises until 2018, when Hungry Jacks' lease expires.

The KFC Mentone stands along the Nepean Highway and is the flagship store of Southern Restaurants which owns 50 KFC restaurants and 14 Pizza Huts in Australia.

Southern Restaurants has a brand new 10 year lease to 2023 with four further five year renewal options and has operated a KFC on the site for around 20 years.

The 258-square-metre restaurant stands on a 2,360 square metre site and was recently upgraded at a cost of $350,000.

Nearby is the Thrift Park Shopping Centre anchored by Woolworths Supermarket, which sold for $29.5 million in 2011.

The KFC premises were marketed by Jamie Perlinger and Billy Holderhead of Burgess Rawson.

Another KFC premises at Karingal near Frankston, also tenanted by Southern Restaurants, was passed-in at $2.95 million.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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