Petrol stations are trending up as one of the commercial market’s glamour classes, with record deals rolling on and agents reporting astonishing interest in properties leased to fuel providers.
Increasingly long leases to blue chip tenants are driving the surge, which in turn is seeing yields dip into rare territory below 5%, with select properties selling on yields under 4%.
A week after United Petroleum offloaded a string of its assets at the latest Burgess Rawson portfolio auctions, a Woolworths-leased Caltex service station in north-western Sydney achieved the highest price for a freestanding station in New South Wales in the last five years.
Buyers united: Petrol powers $117m frenzy at investment auctions
The station at 662 Windsor Rd, Kellyville, sold to a private family investor for $9.4 million on a yield of around 5%.
Selling agent, JLL’s NSW manager of metropolitan sales and investments Dylan McEvoy, says the property’s 12-year lease to Woolworths and two five-year options made it exceedingly attractive.
“Quality investments leased to listed companies remain in strong demand among investor groups,” McEvoy says.
“This was a particularly strong offering for buyers given its strategic position on one of Sydney’s busiest roads in North West Growth corridor, coupled with a top tier tenant.”
Raine and Horne Commercial’s Paul Flego, who is marketing a new Shell and Coles Express service station at Annerley, 4km south of Brisbane’s CBD, says the nature of the humble servo as an investment has changed considerably in recent years.
“The way the interests rates have compressed down, and now with many offering 15 or 20-year leases to multinationals, yields have now compressed down to between 5% and 5.5%,” Flego says.
Flego says demand for service stations has reached fever pitch as investors cotton on to the easy returns on offer.
These are blue chip, set and forget investments
“Since launching (the Annerley property) on realcommercial.com.au I’m averaging between six and eight enquiries a day,” he says.
“I’ve had another four enquiries come through (in the last hour).”
“These are blue chip, set and forget investments.”
The Shell at Annerley is leased to Viva Energy Australia on a 15-year commitment, with options to 2052, and lies opposite Princess Alexandra Hospital.
“The next service station northbound is about 18km away,” Flego says.
The property will be auctioned in-rooms at the Brisbane Riverview Hotel on Thursday, December 1 at 11am.
Extracted from Realcommercial.com.au