Major Perth servo in line for landmark sale

Can service stations continue their strong 2018 commercial property form in the new year?

After a huge 12 months that saw petrol retail assets trade regularly and at consistently low yields, including four Sydney stations sold on the same day in November for a combined $33 million, opportunities to purchase service centres are already presenting in 2019.

While other sectors of the retail industry face headwinds, with online sales having an increasing impact, Burgess Rawson director Jamie Perlinger says petrol stations are well positioned to maintain their popularity among investors.

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“Future-proof lease structures and tenants committing to long-term leases combined with a continuing strong appetite for commercial assets underpins ongoing interest in fuel investments,” Perlinger says.

“Passive and secure long-term returns continue to draw investor interest.”

Perlinger says that technological advances in service station infrastructure mean they also require less ongoing maintenance and intervention from owners, which appeals to buyers who want a ‘set and forget’ investment.

The two retail tenancies and sponsored signage earn almost $1 million annually.

“The technology associated with underground fuel delivery has also come a long way in the last two decades with double skin fiberglass tanks and lines,” he explains.

“These technological advances combined with the tenants’ responsibility to monitor and maintain installations, will enable new owners to have a truly passive, long-term income stream with all leases having annual 3% rental increases.”

The petrol station market will have an early test next month when the campaign wraps up for brand new Shell station in Perth.

The property at 472-480 Great Eastern Highway in Ascot features 10 refuelling bays, a dual drive-through facility, a separate truck canopy with seven bays of high flow diesel and B-double truck access, as well as 18 car parking bays.

It has street frontages totalling 156 metres and 39,000 cars and 8000 trucks pass it daily, being positioned close to Perth Airport.

The service station is located near Perth Airport.

It draws its income from two retail tenancies to Fresh Trading Co and Gloria Jeans, as well as a signage billboard leased to QMS Media.

Fresh Trading Co is on a 15-year lease with options to 2054, with the entire site earning net rent of $995,000, with annual 3% increases.

“This is an extremely rare brand new service centre investment opposite a major domestic and international airport, offering substantial depreciation benefits,” he says.

“The asset is located in the middle of Perth’s expansion with its proximity to the airport and location along the Great Eastern Highway linking with Perth CBD and the booming eastern residential area.”

The Shell service station at Ascot is being sold through expressions of interest, which close at 4pm on Wednesday, March 13.