Melbourne family buys Sale Bunnings premises owned by Dahlsen family on 7.5% yield

A Melbourne-based private family has bought the premises of Bunnings in the Gippsland town of Sale from hardware family Dahlsens, after it was passed in yesterday at auction. 

Dahlsens, a regional Victorian hardware chain dating back to 1877, had operated a hardware store on the premises in Sale since 1974 before selling the business to Wesfarmers-owned Bunnings in November last year. 

J.C. Dahlsens Investments acquired the building premises in 2003. 

Former BRW rich lister John Dahlsen, a fifth generation Dahlsen, is the chairman of the hardware chain started when John Christian Dahlsen opened of timber yard business in 1877 after travelling to Gippsland in search of gold.

He remained involved in gold mining for 40 years while establishing the hardware chain, which today comprises more than two dozen stores across regional Victoria. 

A sale price of $6.36 million was negotiated soon after the Burgess Rawson portfolio auction at a packed River Room at Crown Casino. 

Burgess Rawson director Billy Holderhead says the yield of 7.5%, based on annual rent of around $478,000, was the “sharpest for a Bunnings freehold since April 2011”.

The most recent Bunnings sale was the store in Bairnsdale, which sold for $8.2 million in January on a yield of 7.62%. 

The Bunnings in Echuca sold for $8.55 million in November last year on a yield of 7.89%.

Bidding for the 4,700 square metre building on Macarthur Street in Sale started at $6 million and was passed in on a vendor bid of $6.25 million. 

The building stands on an 8,200 square metre island site zoned business 1, integrated with the Mirvac Shopping Centre anchored by Coles, Woolworths and Target, with 44 on-title car space and an additional 61 car spaces bordering the building. 

The property comprises three buildings – a retail centre with in-store café, a separate drive through trade centre constructed in 2003 and a separate materials storage building, all that remains of the original structure operated by Dahlsens Hardware Stores before Bunnings purchased the business in November last year.  

Bunnings has just signed a new long-term terminated in 2022 with renewal options until 2042. 

The investor memorandum notes that the tenant can request that the landlord spend $1 million during the term of the lease in exchange for paying an upgrade rent equivalent to 7.5% of the cost of works. 

Sale, 200 kilometres east of Melbourne, is the commercial and administrative centre of Gippsland catchment trade population of around 31,000. 

Recently it has become established as the principle transfer space for offshore oil and gas operations in the Bass Strait. 

Sale is in Wellington Shire with a population of around 44,000 and 3,000 businesses. 

Six out of 12 properties that formed part of the Burgess Rawson portfolio auction in Melbourne yesterday sold at auction including the KFC in Mentone, a Midas store in Balwyn and an ANZ Branch in Korumburra. 

A travel agency shop on Waltham Street in Sandringham sold for $525,500 after the vendor withdrew a $530,000 vendor bid and accepted the lower  top bid.