A Victorian private investor has acquired a pre-sale Coles Express service station in the coastal Queensland town of Tannum Sands for $5.5 million, reflecting a yield of 5.81%.
The freestanding service station at 5-7 Booth Avenue is currently under construction and has a 10 year triple net lease to Coles Express with options until 2057. The property is located opposite the Coles anchored Tannum Central Shopping Centre and sits on a highly exposed 1,595sqm corner site.
Michael Hedger, Millan Narsey and Justin Dowers from CBRE’s Retail Investments teams in Brisbane and Melbourne led the Expressions of Interest Campaign.
Mr Narsey said CBRE’s collaborative approach to this regionally located property proved to be successful with eight offers to purchase.
“The ratio of enquires from interstate capital is continuing to increase as yields tighten in both New South Wales and Victoria. We were able to provide an advantage to the vendor by resourcing the capital from interstate, whilst also diversifying the portfolio of the purchaser who was able to capitalise on a more attractive yield than they can currently achieve in Victoria,” Mr Narsey said.
Mr Narsey said whilst the cost of capital and bond yields remain at an all-time low, investors pursuing alternative investment options are increasingly placing higher weighting on the quality of the tenant over the location of the asset, even in regional areas.
“The unique appeal of this asset was the fixed income growth alongside the long term security an ASX listed Wesfarmers covenant provides, instead of a turnover rent review mechanism that is standard for the Coles covenant.”
“In recent years as other capital markets experience volatility, service stations have seen greater levels of competition due to their long terms leases and minimal management, consequently experiencing significant movement down the yield curve. Recent QLD metro service station transactions have seen yields reach as low as 5.21% for Caltex covenants (on long term leases) and the Tannum Sands Coles Express result demonstrates that the yield gap is tightening for multinational tenanted assets in regional QLD,” Mr Narsey concluded.
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