A Coles Express service station in regional Queensland is set to pour fuel on an already red hot petrol station investment sector.

The service station at Ayr, near Townsville, will be auctioned at Burgess Rawson’s next Investment Portfolio Auction at Crown Casino on Wednesday, August 7.

And it could not come at a better time for the asset class, with fuel assets proving to be among the most sought-after commercial investments of 2019.

Burgess Rawson’s previous Portfolio Auction saw another Coles Express at Ipswich sell amid heated competition after it received more than 130 pre-auction enquiries.

It sold on a yield of just 5.34%, and with unsuccessful buyers still on the lookout for similar opportunities, Burgess Rawson’s Jamie Perlinger and Scott Meighan say the Ayr property could spark similar interest.

The agents are expecting a sale price of circa $4.7 million, which would represent an enticing 7% yield.

“There isn’t too much else on the market that will give you a 7% return and has investment characteristics and depreciation benefits as strong as what’s on offer here,” Meighan says.

“It was built in 2014 so there are huge amounts of depreciation benefits for buyers, and it also has fixed rent increases and ‘ratchet’ provisions to guarantee long-term growth,” Perlinger added.

The Ayr station at 130-132 Edwards St enjoys a prime position between a Coles and Woolworths supermarket, and has a 15-year lease to Coles until 2029, plus options to 2044.

Perlinger says the lease structure for the 2015sqm site adds significantly to its appeal.

The Coles Express is positioned between two supermarkets.

“The tenant pays all outgoings including single holding land tax, so this is as passive an investment as you’ll find anywhere,” he says.

“It’s a central retail location as well as potential upside should the new owner wish to investigate, with previous development approval granted for a fast food restaurant and drive-thru to be built on-site.”

Perlinger says investors are returning to service stations in droves.

“Service stations continue to find an audience with investors, and increasingly so in recent months. It’s the security of those long leases and prime land on which they sit that buyers keep coming back to.”

The property currently returns annual rent of $324,596 plus GST.

Burgess Rawson’s 130th Investment Portfolio Auction is at Crown Casino’s River Room at 11am on Wednesday, August 7.

Extracted from Real Commercial