The momentous decision of 7-Eleven putting up another 18 fuel outlets for sale across the country has got the commercial property market abuzz with activity. The news of the second and final offer from the Withers Family has spread like wildfire, and buyers are gearing up for the live-streamed auctions that will begin from February 25 in Sydney and will then be shifted to Melbourne.
The sale and leaseback arrangement of these service stations will mark a significant milestone in the history of the brand, which has been trading here since 1976. Naturally, people looking for commercial property for sale in Sydney are excited to witness this huge event and want to participate in it with full fervour.
The franchised businesses are located in New South Wales, Victoria, Queensland and the Australian Capital Territory and will be sold separately at the auction. It has been estimated that the total yield from these properties will be close to a whopping $70 million. Let us take a look at the series of events that led to this big announcement.
Changing Strategies at 7-Eleven
The February 25 auction will be the last time that a tranche of 7-Eleven service stations will be offered in the form of a portfolio. The last such sale of 15 outlets took place in October 2019, which earned the Withers Family a sum of $77.915 million. The leased properties were sold in a 3-hour marathon auction, and just three months later the new portfolio for sale has been offered by the brand.
The last similar transaction took place in 2014 when another set of 15 outlets were sold for $71.1 million. The capital generated from these record sales has allowed the brand to announce expansion through setting up of 30 new stores every year in Australia.
The owners of the convenience retail chain in Australia had also sold their owner-occupied headquarters on Ferntree Gully Road in September 2019 for $8.1 million. All these sales have been pointing towards the new growth plan of the brand through the introduction of new outlets in the market.
The Eagerly Awaited Auction
The auction will begin from Sydney’s Auctionworks at 10:30 in the morning and will then move to Crown Casino in Melbourne at 1 pm. The properties for sale in Victoria include Pascoe Vale South, Pascoe Vale, Corio, Wantirna and Upwey. The sites being offered in ACT comprise Spence, Mawson, Wanniassa and Melba. The franchises for sale in NSW consist of Maryville, Penrith South, Wahroonga, Mayfield West, Plumpton and Minchinbury. The Queensland sites include Coomera and Nambour.
The sites come with the promise of substantial rental growth and favourable terms like 7-Eleven making payments for all the repairs, maintenance work and insurance. The current rental rates of the properties fall in the range of $116,904 to $327,083, with the highest rents coming from Wantirna in Victoria. The retail chain is expected to maintain a 100% clearance rate which was also achieved in the past auctions as the demand for the sites has been amplifying with each passing day.
The Best-Rated 7-Eleven Sites for Sale
Without any doubt, the Wahroonga property in the Upper North Shore of Sydney is expected to generate the highest bidding. The ideally positioned site is placed beautifully at the entrance of a popular retail strip and is in close proximity of several schools and the train station. With high-passing drive-by traffic, it enjoys widespread visibility in the region.
Another popular contender in the race to fetch the highest rates is the Pascoe Vale South site in Victoria which happens to be the last fuel station before the Tullamarine Freeway. Additionally, the brokers are positive about the 7-Eleven site combined with the Corio Village Shopping Centre in Victoria and the Wanniassa site close to the Erindale Shopping Centre which has been recently renovated at the cost of $39 million.
More 7-Eleven Stores on the Way
The vendor has worked strategically to make the retail chain the third-largest private company in the country. The 18 outlets which are up for sale will be offered with initial 12-year leases, and the enquiries for these properties have been going through the roof ever since the announcement for sale was made in October 2019. The commercial property market is expected to maintain double-digit growth in 2020, and these developments will make sure that the numbers are achieved with ease.
The potential buyers were not even aware of the locations and yet were showing interest in the deal. Many of them are the ones who could not make the cut during the October auction. Even the investors who have already bought a franchise are in the race for another site to broaden their portfolio.
The low rent and solid lease contracts along with the high-growth potential of the franchises have made the sites one of the highly sought-after commercial properties. The sale of these sites will enable the development of the brand as anticipated by the vendor.
The Explosion of Service Station Deals
The past few months have been loaded with major transactions taking place in the service station segment. The low-interest-rate has helped in bringing many high-quality asset-seeking buyers to the market. The biggest surprise came in the form of the staggering $840 million deal between BP and Charter Hall. The latter bought a 49% stake in 225 BP fuel stations in December.
Another comparable transaction took place when Caltex sold 25 petrol stations for a combined value of $136 million. The trading brought forth the increasing demand for the sites. Out of the 25 Caltex sites, ten were bought by Woolworths. The other significant deals that made investors take note of the high activity in the domain include the return of Chevron in fuel retail through a $288 million purchase of Puma Energy asset.
The brand name 7-Eleven is enough to make investors make a beeline for commercial properties for sale in Australia. The current price trends in the segment display the growing interest and improving the confidence of buyers in the sites that are expected to bring excellent rental returns. The recent developments ensure that the future of this sector is brighter than expected.
Sophie Barrett is an experienced real estate marketing professional with a specialisation in commercial property market. She has a Masters degree in marketing from the esteemed Melbourne Business School and has several property management certificates to her credit. Her shrewd marketing policies and business acumen have led to the most rewarding property deals in the major capital cities of Melbourne, Sydney and Perth. She is a popular name in the real estate market and has been serving the industry for almost two decades now. CommercialProperty2Sell is proud to partner with her for some astute discussions and advice on the booming sector.
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