9 Offers received for first On Market Service Station campaign in Victoria post COVID-19
CBRE Victorian Retail Investments have sold a newly built BP Service Station, through an expressions of interest campaign, being the only Victoria service station to transact on market post COVID-19 being announced a pandemic.The service station was sold to a domestic investor (outbidding both interstate and international Asian investors) for $6,700,000 representing a passing yield of 5.01%, and if the two adjoin shops were fitted out and fully leased would represent approximately an equivalent yield of 5.81%)
Located, about 120 kilometres West of the Melbourne CBD, on the outskirts of Ballarat, the service station was developed by local service station developers, with a 15 year lease to BP, in addition to two specialty shops currently return a income from the BP at $336,000 per annum. The service station formed part of a larger retail attraction being next to a newly built McDonalds.
CBRE Senior Director Retail Investments, Justin Dowers, who brokered the deal with Rorey James Kevin Tong, commented a total of 9 expressions of interest were received for the investment ranging from domestic, interstate and international Asian investors.
“We are still experiencing strong investor demand off the back of a backlog of demand from early in the year. BP Delacombe has been the only on market Service Station to be offered in Victoria since the COVID-19 was announced as a pandemic. And the level of strong interest further highlights buyer demand remaining for securely leased investments, especially acknowledging low supply levels”
“This result bodes very well for retail and service station owners, with 9 formal offers received and more than $50m worth of active capital looking to buy this type of asset right now during the COVID 19 climate.” Said Mr. James
Rorey added “The current climate has seen more buyers look towards long term income security, as they seek a ‘flight to quality’ as alternative investments such as the share market and term deposits become less and less attractive.”
Rorey James also added the major population forecast and its impact on the property’s growth potential had also been a key consideration.
“According to the City of Ballarat, Delacombe has a current estimated population of about 6,394people and this is expected to grow by more than 50 per cent over the next 15 years and to nearly 15,073 by 2036.”
Population growth has been taken into consideration more and more with securely leased retail investments, as we have seen with other assets in similar locations buyers are putting a high weighting on the growth forecasted in the future which may impact the future longevity of the region.
The sale for BP Delacombe, follows a series of sales the CBRE team have transacted in the area including:
- 7/11 Ballarat – $5,000,000 // 5.33%
- Bunnings Delacombe (Development Site) – $5,400,000
- Delacombe Town Centre (Development Site) – $20,000,000
Mr Kevin Tong added that Asian investment continued to remain for these income producing investments especially given the lack of blue chip stock in the market, and their increasing attraction to defensive based ‘essential services’ assets.
“What we are witnessing firsthand is that long leased investments are still very attractive to Asian investors, especially those with national covenants,’’ Mr Tong