Lower Hutt's newly opened KFC outlet has been snapped up at a fiercely contested auction for $3,780,000.
The price reflected a passing yield on investment of 5.9 per cent, the lowest yield seen in any sale in the Wellington area in years, said Colliers International agent Michelle Spiers.
This reflected the strength and security offered by the Restaurant Brands tenancy.
There was a lot of interest in the sale. The auction room was packed and 13 would-be buyers had registered an interest.
About 40 bids were made by six bidders before it was knocked down to a Taupo family trust.
The fried chicken takeaway was opened last year on a former service station site at the VIC corner opposite Lower Hutt's Pak 'n Save supermarket.
Restaurant Brands offered it for sale on a long lease under which it is paying an annual rent of $223,245 plus GST.
Its initial lease is for 12 years and it has six further rights of renewal which could extend that out to 48 years.
Colliers managing director Richard Findlay said Wellington yields were firming although not to the extent seen in Auckland where a block of shops recently sold for a yield of 4.7 per cent and where the Greenlane KFC sold for a yield of 4.9 per cent.
"We are starting to see a firming of the market for quality assets," he said.
The market was prepared to pay for quality assets but it was still hard to sell older properties that had earthquake problems or properties that only had short-term tenancies, said Findlay.
The Palmerston North Carl's Jr outlet also drew a lot of interest when it was also put up for auction on behalf of Restaurant Brands.
It sold at a yield of 5.65 per cent to an Auckland investor who paid $2,512,500 for the property which is returning an annual rental of $655,000.
Local Colliers agent Doug Russell said the property was on a similar long-term lease as the KFC stores and this showed investors prepared to look further afield could get a better yield.
- The Dominion Post