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Alternative Investments

Investor buys Coles Tannum servo

alternative-investments

A Victorian private investor has purchased Coles Express, Tannum Sands’ only service station, for $5.5m (£4.42m). The sale reflects a yield of 5.81%.

The Expressions of Interest Campaign was led by CBRE’s Retail Investments Michael Hedger, Millan Narsey and Justin Dowers in Brisbane and Melbourne.

“The ratio of enquires from interstate capital is continuing to increase as yields tighten in both New South Wales and Victoria,” Mr Narsey said.

“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.

“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 said.

The Booth Ave site caused a stir when residents found out about the development application in October. Residents and nearby business owners complained the service station was at the “wrong spot” and it would create too much traffic in the already congested area.

Paul

The author Paul