Investor demand for alternative assets remains at an all-time high, with 12 commercial properties worth $85 million snapped up at Cushman & Wakefield’s latest portfolio auction. This equated to a 100% clearance rate when including two properties, part of the total portfolio, selling prior to auction.
Two premium childcare centres sold under the hammer, headlining $49m in total centre sales. This was led by an Orchard Early Learning Centre in St Ives on Sydney’s north shore transacting on a yield of 4% to fetch $15.9m. This sale represents the highest price paid under the hammer nationally for a childcare centre. The 98-place centre is architecturally designed and Sydney’s first carbon neutral facility, constructed in 2020 and returns a net income of $636,307pa.
Another centre in Camperdown, Sydney’s inner west, sold for $10.3m on a sharp yield of 3.98%. Just 3km from Sydney’s CBD, the centre has a new 15-year lease to Guardian returning $410,000pa, has been fully refurbished and features an expansive rooftop playscape.
Three other childcare centres were hotly contested. A Burleigh Heads Petit Early Learning opposite the town’s central Stockland shopping centre sold for $9.275m after 24 bids, on a yield of 4.21%. The sale set another benchmark given it is the highest price paid under the hammer for a childcare centre in Qld and at a record-breaking yield.
A Newcastle Bright Start ELC leased until 2031 transacted for $5.5m on an 5.44% yield, while a Guardian centre in Sherwood, Brisbane, sold prior to auction for an undisclosed sum.
An IGA-anchored shopping centre in Pottsville, the NSW Northern Rivers, fetched $10.2m, equating to a yield of 4.58%. The site returns $466,729pa in rental income, and the tenant offering is rounded out by Cellarbrations Liquor, Australia Post and Pure Zest Health.
Five assets throughout NSW attracted significant investor interest. A Woy Woy Ampol fuel & retail convenience asset sold for $5.365m on a tight 4.57% yield, highlighting the ongoing strength of the convenience retail service station sector.
An Armidale Fantastic Furniture was snapped up for $3.8m, an IGA, BWS, and Newsagency in Dapto sold for $4.48m, and a La Piazzata in Freshwater sold under the hammer for $1.4m. A Dural-based investor also purchased a Ray White office in the Newcastle CBD for $3.8m on an 4.31% yield.
Three assets throughout Queensland sold as part of the portfolio. A National Dental Care in Algester, Brisbane, sold for $2.63m on a yield 4.42%, a purpose-built Bridgestone in Townsville transacted for $2.52m at 5.12% while a NAB in Mt Isa sold prior to auction.
Cushman & Wakefield’s National Head of Investment Sales, Michael Collins, said: “A 100% clearance rate and with two properties selling before auction, it’s clear just how hot the private investment market is right now. We continue to see childcare assets outperforming, with well-located centres continuing to transact on sub 4% yields.”
“The premium Camperdown and St Ives childcare assets are two of the highest quality centres we’ve seen come to market, and this was reflected by the intense bidding activity and value achieved at auction.”
“The strength of our final auction for 2021 was yet another vote of confidence and reminder of relentless investor demand for long term leased investments that provide defensive fundamentals and passive cash flows benefitting from robust trading activity and secure leasing profiles. We expect the market to remain highly buoyant into 2022 and beyond.”