Investors find ‘salvation’ under the hammer on Melbourne retail strips

Two Melbourne suburban Salvos Stores have sold at auction today as part of a successful Burgess Rawson portfolio auction with 20 out of 25 properties changing hands.

In a packed room at Crown casino, bidders wore their poker faces but generally showed healthy appetite for retail strip premises tied to secure tenants on long leases.

The 407 square metre Bayswater Salvos Store at 716 Mountain Highway sold under the hammer for $1.465 million.

Bidding started at $1 million but quickly rose as a number of bidders competed vigorously for the asset.

Encouraging them to bid, auctioneer David Scholes from Auctionworks said Salvos were now “bona fide retailers” with more than 300 stores across Australia selling “recycled, quality stock”.

The Bayswater store brings in annual net rent of $80,730 equating to a yield of around 5.5%.

The store is leased by Salvos Stores, the retail arm of the Salvation Army, on a five year lease commencing in April 2012 with three renewal options of five years to 2032.

A second 470 square metre Salvos Store on Emerald Road in Beaconsfield in Melbourne's south east, sold for $1.45 million. The store brings in net rent of $98,000 representing a yield of around 6.7%.

Bidding started at $1.2 million. The store is on a renewed lease to 2020 with a further five year renewal option.

The Bayswater store was marketed by Shaun Venables and Jamie Perlinger from Burgess Rawson and Fred Nucara and Brendan Goss of Bellet TBM Commercial.

The Beaconsfield store was marketed by Sam Newton and Jamie Perlinger from Burgess Rawson.

The top price achieved at the auction was for a KFC in Carrum downs currently undergoing a $350,000 refurbishment, which sold to a Springvale family for $3.82 million.

Other notable sales included a 7-Eleven in Hawthorn which sold for $2 million (5.9%) a new Foodworks in Pascoe Vale which sold for $1.015 million (yield of 5.91%), a corner retail property at 565-567 Church Street in Richmond which sold for $2.05 million (5.05% yield) and a Nando's restaurant in Ferntree Gully, which sold for $830,000, a yield of 6.5%.