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Pandemic Pumps Up Service Station Asset Class

Service Station Asset Class

With long leases to national tenants and greater exposure to domestic travel due to the pandemic, the service station asset class remain well-placed to outperform all other asset classes.

According to national valuation firm M3 Property, south-east Queensland has become a battleground for investors looking to bed down cash in the fuel economy, despite fuel retailing revenue dropping substantially during the financial year due.

New supply across the region has slowed over the past 12 months with most new service stations delivered in Brisbane, Moreton and the Gold Coast.

Since January 2017, 115 new service stations have been developed across south east Queensland with 37 completed or currently under construction across 2020.

“We are starting to see a stronger focus on regional service station development, given the increasing saturation of the metro market and southern operators such as Metro, Westside and United,” M3 Property Queensland managing director Ross Perkins said.

“We estimate there to be a pipeline of circa 80 service stations proposed for development across south east Queensland with approximately two thirds of proposed service stations approved.”

 

Service Station Asset Class

▲ It is estimated that there are 6,539 service stations across Australia, of which approximately 1,450 are located in Queensland.

 

Across the year, yields have remained stable, averaging 6.31 per cent across Queensland and 6.11 per cent within South East Queensland.

Earlier this year, Caltex in Brisbane’s north west suburb of Hendra sold for $10.5 million on a yield of 6.1 per cent, meanwhile two 7-Elevens, one in Nambour and another in Doolandella, transacted for $3.8 million and $8.7 million on yields of 6.1 per cent and 6 per cent respectively.

“We have seen no sign of yield softening as a result of Covid-19 to date, instead, we have seen some signs of sharpening,” Perkins said.

“Despite travel restrictions and border closures reduced cash flow in the early stages of the pandemic, the low interest rate environment and appetite for long-WALE is expected to see yields tighten in the longer term.”

During the year ending June 2020, m3property found the average net rental rate was $40,695 per vehicle bay station leases across south east Queensland with the average initial lease term sitting at 12.5 years.

Newly-constructed service stations were found to receive a premium over established serviced stations due to developers increasing fuel canopy sizes and the inclusion of cafes and food and dining precincts within newly-established facilities.

The pandemic has also increased the popularity of drive-through fast food, which increases turn-in traffic for multi-tenanted assets.

 

Service Station Asset Class▲ According to IBISWorld, the industry is estimated to have brought in a total revenue of $31.4 billion nationally during the financial year.

 

With the re-commencement of intrastate travel and borders starting to re-open, petrol stations are now well-placed to benefit from increased domestic travel while international borders remain closed.

“[Looking ahead] the service station sector is expected to continue to evolve,” Perkins said.

“Service stations asset class are likely to be increasingly positioned as convenience hubs in strategic locations as growth in electric vehicle consumption continues.

“As electric vehicle usage increases, fuel storage and environmental risk will decrease.”

Across the year larger portfolio transactions have continued to flow with a number of high-profile deals.

In September, APN Convenience Retail REIT added to its $450 million petrol station portfolio, picking up three petrol stations across Queensland for $27.5 million.

Meanwhile earlier in the year, Charter Hall in partnership with GIC, secured a $682 million half-stake in 203 freehold Ampol petrol stations through an unlisted property trust.

 

Sourced from The Urban Developer

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Brisbane

Mirvac Sells Golden Triangle Tower for $87m

Golden Triangle Tower

Melbourne-based property fund manager Forza Capital has picked up a prominent office building in Brisbane’s “Golden Triangle” from Mirvac for $86.7 million.

The property, located at 340 Adelaide Street—on the corner of Adelaide and Wharf Streets, comprises 12,800sq m of B-Grade office space across 17-levels, together with a ground floor cafe and parking for 100 cars.

In recent years, Mirvac has refurbished the building, upgrading the lobby and repositioning the external ground plane and retail.

Mirvac chief investment officer Brett Draffen said the proceeds from the sale will be redeployed into prime and A-grade commercial assets as well as its $22.4 billion development pipeline across the residential, office and industrial sectors.

The deal, negotiated by CBRE’s Flint Davidson, Tom Phipps and Bruce Baker, represents an 11 per cent premium to its book value in June.

“As the first major, post-Covid capital markets transaction in the Brisbane CBD, this deal highlights the demand from onshore investors for quality office assets,” Phipps said.

Golden Triangle Tower1

The building is 93 per cent leased to tenants Covermore, Cerebral Palsy League and Oracle, and has a weighted average lease expiry of 3.8 years. Image: Supplied

“As travel restrictions ease we expect the market to awaken in the first half of next year fuelled by historically low financing costs and Brisbane’s attractive yield spread.”

Forza Capital director Ashley Wain said the asset represented exceptional value, given the building’s comprehensive refurbishment program, and was transacted with a high degree of certainty over a period of one month.

“Shortly after Covid struck, [we] identified the opportunity to prepare our investor base of sophisticated investors for opportunistic property investments.

“Speed to transact was anticipated to be critical and we believed getting early capital commitments and being able to transact quickly would be paramount to securing new investments on attractive metrics,” Wain said.

The acquisition represented $52.5 million of equity from Forza’s client base of family offices, high net worth advisory groups and individuals, and will now sit in the newly-established Forza 340 Adelaide Street Fund.

“The uncertainty in office investment markets has created really attractive investment metrics which, when combined with highly competitive debt funding, results in a target 8 per cent per annum distribution yield over the first five years of the investment,” Wain said.

Last week, Dexus listed a neighbouring A-grade office tower, located at 10 Eagle Street, with price expectations of $300 million.

 

The post “Mirvac Sells Golden Triangle Tower for $87m” by Ted Tabet appeared first on the theurbandeveloper.com Blog

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Brisbane

Yeronga trophy home fronting the Brisbane River listed

Brisbane River

A riverfront Yeronga, Queensland trophy home has been listed without a price guide.

The five bedroom, five bathroom abode is being marketed by Heath Williams and Nick Hurwood of Place.

Situated at 363 Brisbane Corso, the tri-level home fronts the Brisbane River.

Set on 916 sqm, it features two swimming pools and a private boat pontoon.

Other features include full-height stacked glass sliding doors opening out to a covered balcony which capture sweeping Brisbane River views as well as a ground-level rumpus or games room equipped with a bar, a projector and a linked balcony.

It is located seven kilometres from the CBD.

 

The post “Yeronga trophy home fronting the Brisbane River listed” appeared first on the propertyobserver.com.au Blog

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Brisbane

Mirvac offloads Brisbane office building for $87m

Mirvac office building

Mirvac has offloaded a 17-storey office building in Brisbane to Melbourne-based property fund manager Forza Capital for $86.75 million in one of the first institutional grade office deals to take place in the city since COVID-19 struck.

The building, which is in Brisbane’s ‘Golden Triangle’ at 340 Adelaide Street, had undergone an extensive refurbishment by Mirvac and sold at an 11 per cent premium to its last book valuation in June.

The property, which is 93 per cent leased to tenants such as Oracle, Cover-more Insurance and the Attorney General’s Office, has a 3.8 year weighted average lease expiry.

Brett Draffen, chief investment officer at Mirvac, said proceeds from the sale would be redeployed to grow its asset creation business and would allow the group to “capitalise on opportunities to create Australia’s next generation of workplaces, residential communities and mixed-use precincts”.

The office tower is the first asset to be acquired by Forza Capital following a $240 million capital raising from its client base of family offices and high net worth advisory groups in September and will sit in the newly established Forza 340 Adelaide Street Fund.

Forza Capital director Adam Murchie said they had advised their investor base to be prepared for opportunistic property investments shortly after COVID-19 had struck.

“Speed to transact was anticipated to be critical and we believed getting early capital commitments and being able to transact quickly would be paramount to securing new investments on attractive metrics.”

Forza Capital director Ashley Wain said the uncertainty in the office market had created attractive investment metrics.

“When combined with highly competitive debt funding [the metrics] result in a target eight per cent per annum distribution yield over the first five years of the investment.”

The deal was negotiated by CBRE’s Flint Davidson, Tom Phipps and Bruce Baker, and Matt Lawrence arranging the debt.

“As the first major, post-COVID capital markets transaction in the Brisbane CBD, this deal highlights the demand from onshore investors for quality office assets,” Mr Phipps said.

“As travel restrictions ease we expect the market to awaken in the first half of next year fuelled by historically low financing costs and Brisbane’s attractive yield spread.”

 

The post “Mirvac offloads Brisbane office building for $87m” appeared first on the afr.com Blog
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