A South Road, Yarrawonga property leased to ASX listed tenant Elders Ltd has sold for $1,952,000.
CBRE's Victorian Retail Investments team negotiated the sale of 1-9 South Road to a private syndicate based in the La Trobe Valley in the latest indication of investor demand for regional retail assets in Victoria.
CBRE's Joseph Du Rieu, Thomas Mosca, and Kevin Tong marketed the purpose-built facility, which was constructed by Elders more than 10 years ago to service Yarrawonga’s agricultural economy.
The property was sold with just over four a half years remaining on the lease following a recent five-year lease extension. It comprises a 829sqm building on a prominent corner site totaling 8,092sqm.
“The property presented several hurdles for investors, such as the initial lease term being less than 5 years, and the fact that it was purpose built.
“Investors questioned the security of the tenant after the current lease term expiry – which ultimately held the property back from selling for a sharper yield,” said Mr Du Rieu.
Mr Du Rieu said the Expressions of Interest campaign generated 13 offers to purchase the property with interest from Victoria, New South Wales and China.
“There was over $20,000,000 worth of capital competing to secure this asset. Following the sale of Bunnings Yarrawonga last year, investors are taking note of the benefits that regional investments have to offer,” Mr Du Rieu said.
“One such benefit is the lower land tax assessments in regional locations, as owners of metropolitan properties have seen their incomes deteriorate significantly over the past 12 to 18 months with hikes in their land tax bills.
“This has led to a heightened interest in regional investment properties from investors seeking passive income streams.”
Mr Mosca said the purchaser of 1-9 South Road had backed the commitment Elders Ltd had shown to Yarrawonga and understood the potential merit in a purpose-built facility in the town’s agricultural hub. Mr Du Rieu added that the limited supply of investment grade retail properties on the market was leading to further yield compression for properties in regional Victoria with blue chip lease covenants to tenants such as Wesfarmers and Woolworths.