Investor buys KFC Tannum Sands for $2m at auction
A FINGER-licking good income and annual rent in excess of $150,000 were the seasoning on top of the opportunity to buy KFC at Tannum Sands.
The property, at 1 Booth Ave, sold at a Burgess Rawson's flagship portfolio auction earlier this month for $2,010,000 after some "spirited" bidding from Sydney, Brisbane and Melbourne investors.
Burgess Rawson director Simon Staddon said there were a number of factors which contributed to the property's popularity amongst bidders.
Mr Staddon said there were "strong" levels of inquiry for the property ahead of the February 19 auction.
"Investors were attracted to the property's current lease term, which secures the asset until 2022 with options to 2032," Mr Staddon said.
"Equally important was the property's major upgrade, which the tenant (subsidiary of Collins Foods) finished in late 2017. Having already occupied the site for the last 20 years, the upgrade inferred potential 'longevity of tenure' beyond the current lease term."
The property's affordable and rare income bracket of $110,000 pa was also a huge drawcard for bidders, with the majority of KFC rents exceeding $150,000 pa.
According to Mr Staddon, the property's selling yield of 5.45% is considered low for an asset in regional Queensland but reflects the huge appetite and demand for this asset class.
"Fast Food investments continue to remain one of investors' most prized asset classes but current demand significantly outweighs supply," said Mr Staddon.
"This supply and demand discrepancy has been reflected in a number of fast food asset sales by Burgess Rawson in the last year, including the sale of Guzman Y Gomez in Coffs Harbour in Dec 2017, which fetched a selling yield of 4.45% with a similar income bracket to Tannum Sands," he said.