‘Hungry’ Investors Seek Quality Despite Ongoing Interest Rate Increases

Demand from private investors for quality, long term leased commercial assets remains unperturbed, despite the rising cost of debt, following the results of Stonebridge’s National Investment Sales March Portfolio Auction. The Portfolio Auction achieved a 100% clearance rate, as blue chip investments sold under the hammer with bidding activity from Sydney, Melbourne, Brisbane and beyond.

The first asset offered up for sale was a KFC outlet at Parkhurst, a suburb of Rockhampton in Queensland. The newly built property carries a new 10 year lease to a subsidiary of ASX listed Collins Foods Ltd and is positioned on a strategic 1,627 sqm ‘pad site’ within the Woolworths anchored Parkhurst Town Centre. 11 registered bidders vied for the property which eventually sold for $3,895,000, reflective of a 4.39% yield.

Commenting on the sales, Stonebridge Partner Michael Collins noted “Despite 10 consecutive interest rate increases, totalling over 350 basis points of movement, investors continue to be drawn to the secure fundamentals of quality commercial real estate, underpinned by leases to blue chip tenant covenants. These results are evidence of this and the ongoing resilience in the freestanding investment market.”

A standalone Bridgestone tyre & auto asset was also hotly contested at the Portfolio Auction, selling $300,000 above reserve for $3,860,000, at a yield of 4.39%. The property is secured by a lease to Bridgestone’s Australian Head Office entity, with 4.5 years remaining on the current term to 2027, plus a further 17 years of options thereafter. The 1,869 sqm site sits prominently in a key retail precinct neighbouring 7-Eleven, Subway, McDonalds and a Woolworths anchored Shopping Centre – part of the booming Pimpama growth area 50km south of Brisbane and 27km north of Surfers Paradise.

Stonebridge Partner, Tom Moreland noted “Over 228 enquiries were received across the two national marketing campaigns, demonstrating the ongoing depth in the market. Sentiment from investors has been more positive this side of Christmas, as many ‘watchful’ investors who did not purchase an asset last year are now looking to re-enter the market, with broad acknowledgement the interest rate cycle is near its peak. Irrespective of this, ‘cash’ buyers continue to pay a premium to secure quality, income producing assets which provide advantageous growth and tax effective cash flows via depreciation benefits, compared to alternatives such as bank term deposits.

Stonebridge’s March Portfolio continues with a number of investments available via expressions of interest, with further results to be reported in the coming weeks.

For more information, please contact the agents below:

Tom Moreland  |  +61 408 072 822  |  TMoreland@stonebridge.com.au
Michael Collins | + 61 404 023 204 | MCollins@stonebridge.com.au
Rorey James | + 61 439 400 018 | RJames@stonebridge.com.au
Kevin Tong | +61 422 848 818 | KTong@stonebrige.com.au
Thomas Proberts | +61 439 588 019 | TProberts@stonebrige.com.au

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