Phenomenal commercial property auction sells out entire shopping complex in one fell-swoop

All 22 shops put for auction in the Lincoln North Shopping complex in the Auckland suburb of Henderson have sold under the hammer at a total value of $30.164 million.

Bayleys’ Auckland central auction room was jammed to overflowing for the auction -with fierce competition for the shops which were offered for sale individually, and included a mix of banks, other national retailers and food outlets. Yields ranged from 5.05 per cent to 12.5 per cent, with 15 of the properties selling at yields of less than 7 per cent.

Bayleys senior auctioneer Hayden Duncan says there was phenomenal bidding on many of the properties, with multiple bids which got down to $1000 increments on some of the smaller offerings.
“It’s probably the most competitive bidding we’ve seen at a portfolio auction since the height of the market, and produced the best yields we’ve achieved at an auction of commercial and industrial property this year,” Mr Duncan said.
The shops were marketed by James Chan and Cameron Melhuish, of Bayleys Auckland. Chan says the enormous interest in the properties is reflective of the ‘flight to quality’ in the current market.

“Investors are very much focused on the quality end of the market and are looking for properties that have long leases to quality tenants in strong locations. It’s not often that the number of quality tenancies that were in this portfolio go up for sale at one time which is why it attracted so much interest,” Mr Chan said.

Three bank properties occupied by the ANZ, Westpac and BNZ with nine year leases running until late 2015 or early 2016, attracted some of the strongest bidding and lowest yields at the auction. The Westpac Bank achieved the highest sale price of the day, selling for $3,510,000 at a 5.65 per cent yield, while the ANZ went for $3,030,000 at 5.47 per cent and the BNZ fetched $2,340,000 at 5.38 per cent. A Kiwi Bank and Post Shop outlet sold for $1,000,000 at a 5.7 per cent yield on a lease until 2011.

Mr Chan says many of the buyers came from Bayleys’ database of locally based South East Asian investors who are particularly keen on retail property. However, he says an extensive and high profile marketing campaign for the auction also generated a lot of additional enquiry, and around one-third of the buyers were introduced by other Bayleys salespeople and offices.

The Lincoln North Shore Shopping Centre was developed in 2006 and 2007 on a1.67 hectare site on the corner of Lincoln Road and Universal Drive. The property was previously home to a Pak n’ Save supermarket which relocated to one of the Southern Hemisphere’s largest supermarkets on a site directly opposite. This also houses one of New Zealand’s biggest Mitre 10 Mega stores.

Fellow sales agent Cameron Melhuish says the shopping centre’s prime position on one of the busiest corners in West Auckland, opposite Pak n’ Save and the huge Mitre 10 store and close to the motorway, was also important in attracting investor interest.

“The fact that Lincoln North Shopping Centre has attracted numerous well known national and international tenants, and is fully occupied, is testament to the strength of the location and calibre of the finished product,” he said
Here are the properties which sold at the auction: 199

• A 124 sq m Columbus Coffee outlet in prime corner position sold for $1,235,000 at a 5.6% yield. 9-year lease to February 2015.
• A 254 sq m TAB site sold for $1,625,000 at a 5.99% yield. 9-year lease to NZ Racing Board to February 2017.
• A 118 sq m Pizza Hutt outlet sold for $775,000 at a 5.96% yield. 6-year lease to Restaurant Brands to January 2013.
• A 144 sq m Post shop and KiwiBank outlet sold for $1,000,000 at a 5.7% yield. 5-year lease to NZ Post to November 2011.
• A 77 sq m Subway and Dunkin Donuts outlet sold for $690,000 at a 5.17% yield.
• A standalone 292 sq m drive-through KFC outlet right on the corner Lincoln Road and Universal Drive sold for $2,724,586 at a 6% yield. 12-year lease to Restaurant Brands to November 2018.
• A 341 sq m BNZ Bank site sold for $2,340,000 at a 5.38% yield. Leased until January 2016.
• A 502 sq m ANZ Bank site sold for $3,030,000 at a 5.47% yield. 9-year lease until December 2015 with current net return of $165,688p.a
• A 663 sq m Westpac Bank site sold for $3,510,000 at a 5.65% yield. 9-year lease until November 2015 with current net return of $198,368p.a
• A 755 sq m SuperCheap Auto outlet sold for $2,510,000 at a 7.97% yield. New 7 year lease with current net return of $200,042p.a
• A 498 sq m Avantiplus Cycles shop sold for $1,700,000 at a 7.93% yield. 9-year lease until November 2015 with current net return of $137,734p.a
• A 58 sq m Taste of Orient fast food outlet sold for $535,00 at a 5.38% yield. 6-year lease until January 2015 with current net return of $28,772p.a
• An 80 sq m Kings Roast takeaway sold for $775,000 at a 5.05% yield. 9-year lease until February 2015 with current net return of $39,173p.a
• A 121 sq m Moziacs Kebabs and Café sold for $815,000 at 5.05% yield. 9-year lease until November 2015.
• A 233 sq m Video Ezy outlet with a lease to September 2009 sold for $1,060,000 at a 7.55% yield. The vendor offered a two-year underwrite from the end of the lease at $80,00p.a should the tenant not renew.
• A 60 sq m optometrist outlet sold for $315,000 at a 6.14% yield. 5-year lease until July 2011.
• A 93 sq m hair salon sold for $239,545 at a 6.25% yield. 6-year lease until September 2012.
• A 46 sq m Buds and Blooms florist shop sold for $175,000 at 6.86% yield. 9-year lease until August 2015.
• A 10 sq m nail bar sold for $55,000 at a 12.48% yield. 4-year lease to January 2013.
• A 746 sq m Lollipops educare centre sold for $1,460,000 at an 8.13% yield. 9-year lease to February 2017.
• A 1210 sq m Animates pet and veterinary care store sold for $2,750,000 at a 10.3% yield. 9-year lease to October 2015.
• A 382 sq m first floor space leased to three tenants sold for $830,000 at a 10.74% yield.