$60m petrol portfolio to fuel investor appetite

By | octubre 3, 2017
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A portfolio of 17 petrol stations leased to big fuel distributors has hit the market with expectations of about $60 million.

The bulk of the fuel outlets on offer, anchored by Shell, BP, Caltex, Viva Energy and United Petroleum, are in Victoria.  Three are in New South Wales and one in Queensland.

Few portfolios with such a diverse tenant base have been offered to the market before, selling agent Colliers International’s Daniel Wolman said.

“It’s unusual to have 17 properties with a range of different brands come to market. In past there has been big portfolios put up for sale generally leased to the one operator,” he said.

“Although the major banks have tightened their lending criteria and increased their interest rates, investor appetite still remains for premium investments, particularly petrol stations.”

The properties churn out a net annual income of about $3.5 million on a weighted average lease expiry of 10.5 years, a figure that includes new development projects being completed.

Three of the service stations are leased but under development, due to be finished early next year.

Mr Wolman said the assets had generated interest from large funds, the self-managed super sector and private investors.

Service stations have evolved into a significant asset class for both ends of the investment spectrum over the past decade.

Stand-alone service stations are popular with smaller investors searching for stable long-term income, while major fuel distributors and supermarkets have moved to aggregate multiple outlets in an effort to maintain market share.

Most of the profits made, come not from selling fuel but from over the counter sales of items in the service station’s convenience store.

Woolworths and Coles have become dominant in the sector, branding and stocking service station outlets and using discount fuel dockets to attract shoppers to their supermarket offerings.

The 17-strong portfolio is being sold by a group steered by Melbourne-based Konfir Kabo, the head of boutique law firm Kabo Lawyers.

Mr Kabo leads a small group of private investors who developed the properties over a five-year period.

They intend to sell the sites, stretching from Wollert on Melbourne’s outskirts to Jindera in NSW, to free up capital for expansion.

Individual petrol stations are often transacted through portfolio auctions.

Portfolio specialists Burgess Rawson recently sold a Woolworths branded outlet in Morwell, in eastern Victoria, for $1.18 million on a yield of 5.1 per cent.

At the other end of the spectrum, a large service station and convenience store complex on Melbourne’s West Gate Freeway, owned by MAB Corporation, sold for $22.5 million late last year on a 5.5 per cent yield.

The petrol and fast food outlet at the foot of the West Gate bridge on the city side was partially leased to Viva Energy Australia.

Viva controls Shell and Coles Express outlets and was a tenant on the site, along with Hungry Jack’s and Red Rooster: all were on 15-year terms returning a total net income of $1.41 million.

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