A MELBOURNE-BASED investor has purchased the Priceline Pharmacy building in the Sunshine Coast suburb of Caloundra as 66 Bullock Street sold for $2.875 million.
The property, 100 per cent leased to Star Pharmacy Group Pty Ltd, was offered for sale via a successful expressions of interest campaign.
The asset was marketed and sold by Ray White Commercial QLD father and son duo Stephen and Elliot Kidd, in conjunction with Henzells Commercial Real Estate’s Paul Bell.
Mr Stephen Kidd said the Melbourne investors – one of over 200 enquiries – acquired the property as their first Queensland asset and were now looking for more health-related assets.
“As a result of the COVID-19 pandemic, there’s more interest than ever before in the Sunshine State, with tenanted investments proving to be like gold-dust,” he said.
“The Caloundra campaign focused their attention on the southern end of the coast which has quite limited purchase opportunities. Demand is certainly out weighing supply and putting upward pressure on prices.
“When you combine the affordability of the state, the climate, historic low interest rates and the relative safety from the COVID-19 pandemic, it’s the perfect recipe for buyers to invest.”
Mr Elliot Kidd said the two-level commercial building was in the heart of one of the Sunshine Coast’s most popular tourist destinations.
“A new corporate head lease from the Star Pharmacy Group over the entire building was being offered, with the ground floor retail occupied by Priceline Pharmacy, and upstairs previously used as a function room,” he said.
“The area was chosen by the vendor considering the significant financial synergies offered by the adjacent medical centre.
“It’s prime exposure to high traffic flows and the growing underlying trade area population and tourist numbers were also real drawcards.
“The current net income produces $166,340 after all deductions, including land tax and ground floor income, and is underwritten by a fresh five-year corporate lease with options until 2045.”
“Whilst there was plenty of inquiry, a combination of the Banking Royal Commission combined with COVID has left banks and in turn, valuers, more conservative than has historically been the norm,” Mr Stephen Kidd said.
“As a result, we ended up having to sell the property three times – each time we would get to the valuation stage, but the valuers would value it substantially under the agreed sale price.
“In the end, our take-away lesson was to ensure that the purchaser wasn’t stretching their financial resources to acquire the property, and that they understood a higher equity contribution was more than likely to be required.”
“Appointing a specialist valuer who understood the asset class was also more appropriate than working with a generalist who didn’t understand the retail sector or the occupancy costs attached to differing sub-categories of tenant,” Mr Elliot Kidd said.
“It was frustrating, especially when the Star Pharmacy Group is a national tenant with over 50 stores, and had a very low occupancy cost – but was being compared to mum and dad retail operations.
“Now we’re looking for a complementary business to occupy the upstairs area. One that has synergies with the large number of customers attracted by the pharmacy’s substantial business downstairs and also customers attracted by the adjoining medical centre.
“Preferably a business in the health sector, looking for low-cost accommodation in the main street of Caloundra.”