NEWS

Strong returns fuel investor interest as service station sales take off

Multiple service stations in NSW and QLD sell to private investors as more come to market.

Investor appetite for secure retail investments is continuing, with tightening yields reflecting a rush from investors to enter the market before the end of the calendar year.

According to Harry Bui, National Director, Investment Services at Colliers International, “A lot of vendors are capitalising on strong interest from both domestic and offshore investors seeking quality assets with coveted long term leases to blue chip tenants, such as 7-Eleven, VIVA Energy and Hungry Jacks.”

Alexander Elliott, Executive | Retail Investment Services added, “The Reserve Bank of Australia’s decision to cut the official cash rate by 25 basis points, to a record low of 1.50%, may stimulate the market even further adding additional pressure to tightening yields, as investors look to find a secure return on their capital. Premiums are being achieved for investments with fixed annual reviews which are highly prized in the current low inflation environment.”

The success of the recent VIVA Energy IPO is testament to the fact that the service station sector has experienced a resurgence as highlighted by the significant investor interest in the limited high quality offerings made available to the market. Investors are drawn to the high profile nature of the sites, allowing for a secure long term investment, high profile multinational covenant, guaranteed rental reviews and potential reversion at the end of the lease from the underlying land value. 

Coming to market November 8, as part of Colliers International’s National November Auction Portfolio, is a recently completed service centre at 190-198 Princes Highway, South Nowra. The site comprises of 2 separate lots and benefits from great exposure. Comprising of a standalone Hungry Jack’s restaurant and a Shell Coles Express with an attached Subway restaurant, the properties benefit from long term leases of 15 years. James Wilson, Harry Bui and Alexander Elliott will act on behalf of APN, with expectations in excess of $10 million.

A brand new service station, leased to 7-Eleven and KFC, will also be auctioned on November 8 as part of the National October Auction Portfolio. The property, located at 190 Eumundi Road, Noosaville, will be auctioned by Nick Dowling and Harry Bui of Colliers International on behalf of the vendor Empirica, with a price guide in excess of $10 million.

Colliers International sold two service stations this past month in off-market transactions, all to local, private investors, further encouraging more properties to come to market before the end of the year. Included in these sales was a 7-Eleven under construction in Maitland (Thornton) NSW, which is scheduled to open in late September. The 7-Eleven service station features a 15 year lease and was sold for $4.95 million on a 6.5 per cent yield through Harry Bui and Adam Leacy of Colliers International on behalf of GWH Build.

287 Main Street, Toukley NSW is another brand new development leased to 7-Eleven for 15 years and was sold for $4.8 million on a 6.15 per cent yield. This property was sold off market to a local private through Harry Bui of Colliers International on behalf of Isaac Property Group.

Given the increasing demand for secure, retail investments along the eastern seaboard, Colliers International anticipates significant investor interest in the upcoming November Premium Investments auction portfolio, which features blue chip covenants such as VIVA Energy, 7-Eleven, Hungry Jack’s and KFC.

For further information about Colliers International Auction please visit www.colliers.com.au/auctions or watch our auction presentation. Click here to view the video.



 

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