Bunnings Warragul store snapped up by Brisbane investor for $4.6 million as Coles versus Woolies DIY battle pushes up rents

Bunnings Warragul store snapped up by Brisbane investor for $4.6 million as Coles versus Woolies DIY battle pushes up rents
Bunnings Warragul store snapped up by Brisbane investor for $4.6 million as Coles versus Woolies DIY battle pushes up rents

All seven hardware store premises listed for sale in Sydney and Melbourne Burgess Rawson portfolio auctions have sold to investors with yields ranging from 5.79% to 10.28%.

Six of the seven stores are Home Timber and Hardware, 67% owned by Woolworths and 33% by US-based Lowes - the same partnership that owns the Masters business - and one was the Bunnings (pictured below) in Warragul, Victoria.

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The successful sales under the hammer comes as demand rises among private investors for commercial property assets with strong lease covenants.

Total enquires for the Melbourne portfolio exceeded 650 for the first time ever for a Burgess Rawson portfolio auction.

Burgess Rawson’s previous best was 641 in April 2009 where five more properties were offered than this 14 property campaign.

The top price paid under the hammer was $4.63 million on a yield of 8.54% for the Bunnings in Warragul, a regional town 104 kilometres southeast of Melbourne.

It was bought by a Brisbane-based investor, who had missed out on previous Bunnings properties.

Burgess Rawson director Billy Holderhead said Bunnings assets were always “really popular” among investors both in upturns and downturns.

“Masters has made it a much competitive environment for Bunnings, rents have increased fairly significantly.

“In some situations leases have been renegotiated to be a little more landlord friendly,” he told Property Observer.

The Warragul Bunnings is at 10 June Court with a lease running until 2022 with two renewal options of five year's each.

It brings in annual rent of around $395,992.

The modern 5,094 square metre building includes a drive through plus nursery and secured yard on a 10,510 square metre site.

The vendor was a Bunnings private syndicate.

The highest yield of 10.28% was achieved for the Home Timber & Hardware store in the Tasmanian port town of George Town, on a brand new seven year lease with 21 years of renewal options.

The two level store has 1,070 square metres of retail space on a 1,777 square metre site with further development potential.

The stores sold for $458,000 below pre-auction expectations of around $500,000 plus.

 


Another Tasmanian store, the Becks Timber & Hardware premises at Shearwater sold for $890,000 on a yield of 8.66%.

Holderhead said the yield would have been above 10% when the business was privately owned. It forms part of the Woolworths/ Lowes enterprise with a brand new seven year lease with multiple renewal options and a new lease  of $71,000 net per annum.

Shearwater is a popular holiday destination 17kms from Devonport and one of Tasmania's fastest growing towns.

A third Tasmanian hardware store – Becks Timber & Hardware – sold for $890,000 on an 8.66% yield.

All three Tasmanians hardware stores were bought by Melbourne-based buyers, who bought them sight-unseen.

Holderhead says there were Tasmanian bidders, but they were unsuccessful.

The other hardware businesses to sell were the Home Timber and Hardware in Canberra, which sold for $4.57 million on a 7.68% yield, a Home, Timber and Hardware in Queanbeyan, NSW which sold for $3.275 million on a yield of 7.79% and the Home, Timber and Hardware in Footscray which sold for $3.11 million on a 5.79% yield.

In addition, the Port Adelaide state office of hardware chain John Danks & Son Pty Ltd, also tenanted as part of the Woolworths/Lowes partnership, sold for $712,000 on a yield of 8.01%.

In total 12 out of 14 properties in the portfolio auction sold under the hammer totalling $21,395,000 following Tuesdays seven property sell-out, bringing in $24,846,000.

In the Melbourne auction, the average premium on reserve expectations for the properties sold yesterday was 14% (or $1,913,000 overall), with three properties achieving 35% or more in excess of the vendor’s pass mark.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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