The market for childcare centres, fast food and healthcare properties shows no signs of slowing, with investors snapping up almost $44 million worth of assets as part of Cushman & Wakefield’s September portfolio auction. The portfolio assets sold collectively almost $4.6 million above reserves.
Headlining the auction was the Lilyfield Early Learning Centre, which was purchased for $14.35 million. The centre was sold on a record breaking 3.83% yield as investors vied for one of the first inner city metro Sydney centres to be brought to market in many years. Investors were attracted to the $550,000pa in income and the 20-year lease to 2041, and location just 3km from Sydney’s CBD.
Image: SOLD - 2-6 Justin Street, Lilyfield NSW
A childcare centre in Darra, 13km south-west of Brisbane, sold under the hammer for $7.75 million on a record low yield of 4.9%, while a G8 Education centre in Cessnock, New South Wales, sold prior to auction for $6 million on a 5.12% yield.
Leading the fast-food offering was a Taco Bell situated in Tamworth’s core retail precinct. The property was sold to a high-net-worth investor for $4.7 million, equating to a 3.77% yield. A Hungry Jack’s in Muswellbrook, on the New England Highway in NSW’s Hunter region, fetched $3.4m on a 4.5% yield.
A fast food and retail centre in Mackay also sold before auction for $3.9 million, equating to a 6.05% yield. The centre has a WALE of 5.2 years, returning $238,878pa and is anchored by Subway and Gloria Jeans.
Image: SOLD - 127 Darra Station Road, Darra QLD
Finally, the NAB Business Banking Centre and the Centre for Gastrointestinal Health building, located within the Sydney healthcare precinct, sold under the hammer for $3.6 million on a 4.25% yield. The site is next to the Gregory Hills Corporate Park and provides a net income of $155,200 pa.
Garnering significant interest still are an Ampol and Red Rooster fuel and retail convenience asset in Beaudesert, Queensland, and a 7-Eleven and Repco in Woy Woy, on the New South Wales Central Coast. These assets are being sold via expressions of interest as part of Cushman & Wakefield’s September portfolio. Both campaigns are due to close on Wednesday this week.
Image: SOLD - 22-26 Roderick Street, Tamworth NSW
Cushman & Wakefield’s Head of National Investment Sales, Michael Collins, said: “The market for alternative assets is continuing its stellar run since the beginning of 2020 as investors’ hunt for yield remains insatiable. The fact that two properties sold prior to auction then 100% of the remaining assets traded on the day shows how strong demand really is. With the number and appetite of underbidders, we don’t see that trend slowing anytime soon.”
Cushman & Wakefield’s Associate Director, Tom Moreland, said: “Childcare centres continue to be at the top of investors’ wish lists, underscored by a raft of government support and strong fundamentals in the COVID-19 era. Our team has now sold well over $200 million in childcare centres since the beginning of the pandemic and have seen yields drop significantly lower, with strong compression for both metro and regionally located assets.”
Cushman & Wakefield’s Associate Director, Yosh Mendis, added: “The assets on offer all provided exceptional tenant covenants to brands that have traded well despite COVID-19 restrictions, with fast food and healthcare remaining standout performers. Given interest rates are expected to remain low for some time, we expect the market to continue to perform well into next year and beyond.”