Three OTR convenience retail freeholds, one in Adelaide and two in NSW, go under the hammer at the Sydney Opera House on 23 June, offering investors a combined net income of approximately $1.56 million a year. The properties themselves are worth a look, but the lease terms behind them are the real lesson for anyone who owns the land under a service station.
Three sites, one tenant
The strongest of the three is OTR Ropes Crossing in Sydney’s western growth corridor: a 2025 build on a 2,780sqm corner with a 24/7 drive-thru lane and a freestanding car wash, returning approximately $687,805 a year, positioned opposite a Coles anchored shopping centre in a catchment forecast to grow 43 per cent by 2046. OTR Hendon in Adelaide, also newly constructed, pairs a 394sqm store with a Guzman y Gomez drive-thru on a main arterial carrying more than 22,000 vehicles a day, returning approximately $552,975. OTR Hamilton, in Newcastle’s car dealership strip, was upgraded in 2024 and returns approximately $321,368.
All three are leased to Viva Energy, the ASX 200 company that acquired the OTR business, on terms of 15 to 18 years with options stretching into the 2070s.
The lease behind the price
What makes these properties investment grade is not the fuel. It is the lease. Each one is a triple net structure: the tenant pays the rates, land tax, building insurance and management costs, and carries all structural maintenance, repairs and replacement, including the fuel tanks and equipment. Rent rises by a fixed, compounding 3.5 per cent a year. The landlord collects income with almost no obligations attached, which is precisely what investors pay a premium for.
The Peregrine playbook
The vendor is Peregrine Corporation, the Shahin family company that sold the OTR operating business to Viva Energy and kept the real estate, signing long leases back to the buyer. It has been selling that land down progressively since; an earlier tranche of three sites reportedly fetched approximately $24.65 million. The sequence is worth studying: sell the business at an operating multiple, then sell the income stream the business pays as a separate, premium priced asset.
The read for operators who own their land
A service station freehold is worth what its lease says, not just what its location says. The same site with a strong tenant, a long term and a triple net structure is a fundamentally more valuable asset than one held casually by the owner’s own operating company. For operators weighing an exit, the Peregrine approach shows the value in treating the business and the property as two separate sales, and in getting the lease right before the property goes to market. For operators looking to buy, the terms on these listings are the benchmark for what institutional money expects.
The 23 June test
The portfolio is auctioned at 10:30am on Tuesday 23 June at the Opera House’s Yallamundi Rooms. The yields these three achieve will set the clearest mid year benchmark yet for fuel and convenience freeholds, and a reference point for every operator wondering what their own site might be worth.