British giant cashes in as investors spend big on petrol stations
British fuel retailer EG Group notched up a 100 per cent clearance rate after selling nine of its Woolworths Caltex petrol stations for $54.5 million as part of a Sydney portfolio auction.
The fuel and convenience stations, which EG will lease back on new 15-year terms, sold on yields ranging from just 2.9 per cent to 5.75 per cent.
They were among 17 of 18 properties to sell as part of a retail and childcare centre property auction put together by agents Cushman & Wakefield and hosted by Cooley Auctions in Sydney just over a week ago.
In total, $94.3 million of property changed hands at an average yield of 4.73 per cent, and being $13 million above combined reserves highlighted the appetite among private investors for securely leased non-discretionary assets given record low interest rates.
There were 369 bids placed across the 17 offerings – an average of 22 bids per property.
Alongside the nine petrol stations, all five childcare centres offered sold under the hammer, including one in Brisbane that sold for $8.31 million to a Hong Kong-based investor on a yield of 5.8 per cent.
EG Group, founded by billionaire brothers Zuber and Mohsin Issa, acquired the nine petrol stations as part of a 2018 deal to buy 540 fuel convenience sites from Woolworths for $1.725 billion.
They included a property in Brookvale on Sydney’s northern beaches that changed hands for $8.8 million on a record-low 2.9 per cent yield.
Another petrol station in Newport in northern Sydney sold for $8.3 million on a 3.25 per cent yield.
“Seeing petrol stations sell on sub-3 per cent yields is reflective of the market dynamics at present, as high net worth investors continue to target defensive assets and scour the market for higher-yielding investment opportunities,” said Cushman & Wakefield national director Michael Collins.
“Private investor demand for commercial real estate assets continues to go from strength to strength, extending its run in late 2020.”
Mr Collins said clearance rates across the real estate agency’s last three auctions were averaging about 90 per cent.
“Our team has now sold more than $220 million in commercial real estate assets since November last year, and the size, total value and level of bidding activity during our last three auctions has climbed significantly. This latest auction is the biggest held in Sydney for some time.”
Also selling at the Sydney auction was an Officeworks retail store in Aspley, Brisbane, which was purchased by a Melbourne-based family for $9.5 million on a 4.9 per cent yield.
David McRae, from buyers’ agency McRae Property Melbourne, acquired the property on the behalf of the family. Mr McRae said it was the second Officeworks he had purchased for the investor.
Bucking the trend of reserves being smashed, Mr McRae said the reserve had been set at $9.68 million but was lowered by the vendor to accept his bid.
The vendor was property developer and race car driver Warren Wadley, who paid $5.3 million for the property in 2012.
A similar-style portfolio auction in Melbourne last month hosted by Burgess Rawson generated sales of $67 million and a clearance rate of 86 per cent as 20 out of 23 properties sold under the hammer.
Extracted from AFR