High-rise developer Ken Woodley is looking for more service stations to top up his personal investment portfolio.
With a long-term lease in place, the veteran Brisbane property player recently snapped up a newly-built service station at 2009 Sandgate Rd, Virginia.
The transaction reflects the continuing strong level of investment activity in the retail service station sector.
It is Mr Woodley’s third acquisition of a service station asset after shifting the focus of his investment portfolio from convenience retail centres.
His other purchases include a Woolworths Petrol at Kenmore and a Caltex in North Lakes.
“With shopping centres you’re dealing with multiple businesses and co-ordinating a number of tenants,” Mr Woodley said.
“But with the service stations I’m only dealing with one company for each of them. It’s absolutely trouble free.”
The Virginia service station was purchased on a yield of 5.75 per cent and Mr Woodley said he was achieving returns of up to 7 per cent from his other two assets.
Developed by Evans Long on a high profile 2843sq m site, it is leased to 7-Eleven on a 15-year lease plus four five-year options. The tenant is responsible for all outgoings, excluding land tax.
Savills’ Michael Harcourt, who negotiated the asset’s sale, said the agency’s Brisbane office had been involved with 10 service station investment and development site transactions over the past 12 months totalling almost $25 million.
“Investor demand for blue chip, long term-leased service station assets remains very strong,” he said.
“The lack of available stock coupled with record low interest rates has resulted in substantial yield compression across the country.
“But with the aggressive expansion of major fuel retailers — namely Coles Express, Woolworths, Caltex, 7-Eleven, Viva (Shell), BP and Puma — developers are actively seeking suitable sites to satisfy tenant demand and generate potentially substantial capital returns.”
According to construction activity analysts Cordells, there are 100 potential new or redeveloped service stations in Queensland that have been recently delivered or are in planning and development stage.
Mr Harcourt said the acquisition of the three service station assets by Mr Woodley followed his divestment of two retail convenience centres — Holland Place at Holland Park West in Brisbane’s inner southeast for $3.4 million, and the Sherwood Court in the city’s southwest for $3.9 million.
The sale of the site for the Virginia service station in October 2014 for $1.75 million to Evans Long also was negotiated by Mr Harcourt. It was sold with a lease agreement in place with 7-Eleven.
Mr Harcourt said the completed service station appealed due to its high-exposure main road location underpinned by a secure long-term lease.
“It is in a very prominent left-hand inbound location adjoining Virginia Golf Course on Sandgate Rd, one of the main arterial roads in Brisbane’s northern suburbs with an average of over 54,000 passing vehicles each day,” he said.
“The combination of the high-profile positioning, strategic inner Brisbane location, new construction and long-term lease presented a prime service station investment proposition.”
Article originally published by Phil Bartsch, The Courier Mail, 27/5/2016