A fully-leased medical and retail property at 9 Ashgrove Road, Brisbane has been sold for $8.88 million at a passing yield of 5 per cent, with a passing net income of $444,300 per year. 

It was purchased by GDA Diversified Property Trust and sold by Elouera Group in a deal negotiated by Blake Goddard and Matt Barker of Knight Frank, in conjunction with Michael Hedger, Darren Collins and Jack Morrison of CBRE. 

Completed in May 2019, the Ashgrove building offers 618 square metres of medical/retail accommodation over two levels on an 800 square metre site with secure basement car parking for 26 vehicles. 

At a glance:

• A fully-leased medical and retail asset at 9 Ashgrove Road in Ashgrove has been sold for $8.88 million at a passing yield of 5 per cent. 
• The property was purchased by GDA Diversified Property Trust from Elouera Group in a deal negotiated by Knight Frank and CBRE. 
• The deal represents a suburban commercial record for $/sqm of NLA and yield for an asset of this nature.

The property is 100 per cent leased to three tenants including the Bank of Queensland, Ashgrove GP clinic and RecoverWise Physio, with 75 per cent of the income generated via the medical tenants, which are well- established in the precinct. 

Mr Goddard told WILLIAMS MEDIA the campaign generated significant interest from a large number of private investors, syndicated groups and medical funds. 

“We received several offers, with the result that we were able to extract a sharp yield of 5 per cent flat, setting a suburban record for price per square metre of net lettable area of $14,369 and yield for an asset of this nature," he said.

“The deal was negotiated and exchanged as COVID-19 restrictions began to increase, however, the buyer recognised the security in this particular property providing strong underlying real estate fundamentals."

"We believe the market will see a continued environment of competitive yields for primary assets as buyers seek cash security in these uncertain times.

"This will most likely drive a wedge between primary and secondary assets, creating a larger spread of yields on future transactions.”

Mr Collins said the best interest came from the passive investors including numerous parties who worked in the medical industry and were attracted to the strong lease covenants.

“Additionally, the property offered diversified income security, with the asset providing cash flow from medical and strong national tenants, offering an attractive tenancy mix to the incoming purchaser," he said.

“The brand new commercial building in prestigious Ashgrove, just 4.5km from the Brisbane CBD, was constructed to a high quality, and will require minimal capital expenditure in the short to medium term while the incoming purchaser will also benefit from significant depreciation benefits immediately.” 

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