Energy giant fuels long-term income security for investors
A North Geelong service station with a 15-year net lease to an ASX-listed energy giant offers a high-yielding prospect for investors chasing long-term income security.
The 1668sq m site at 358 Thompson Rd offers a Caltex-branded freestanding service station leased.
The facility is leased to Westside Petroleum, which is a 100 per cent owned subsidiary of ASX-listed Viva Energy Group.
The station has a net passing income of about $260,000 a year.
Stonebridge directors Kevin Tong and Rorey James are marketing the service station and anticipate the 15-year net lease to Viva would be hotly contested given the current low interest rates and limited opportunities.
“The growth in Geelong is unprecedented at the moment, with the working from home strategies driving more of sea change for residents,” Mr Tong said.
“When you couple this with the 50 per cent stamp duty savings on regional locations, assets in Geelong become extremely attractive.”
Mr Tong said price hopes were low to mid $4 million.
“It ticks a lot of boxes for what investors are looking for if you just looking for a steady return,” he said
“The reality is at the moment the cost of debt is so low.
“If people have got money in the bank they’ll probably get .5 per cent at the moment, it doesn’t make sense, so some investors are getting more attracted to those longer term investments.
“If you’re getting a return of 6 per cent of higher it ticks a lot of boxes,
He said the service station had been completely redeveloped in 2017, including new tanks.
The last service station to trade in the region netted a strong 4.9 per cent yield.
The Shell/Viva Energy service station and mycar service centre at 20 Winki Way, Torquay, sold for $8.355m at auction in March.
Other service station transactions include a Shell in Yarraville ($10.5 million, 5.93 per cent yield), Caltex Wodonga, ($1.6m, 4.55%) 7/11 in Maidstone ($6.7m, 4.83%) and BP Westernport ($20.3m, $4.89%).
Viva Energy acquired Westside Petroleum in a two-stage deal between 2018 and 2020.
The company recently reported it had returned to profitability in the first half of 2021 after a grim 2020, with the company saying it is likely to book a lift in underlying profits for the financial year.
Viva tumbled to a $35.9m after-tax loss in 2020 after fuel sales crashed as a result of Covid-19 pandemic lockdowns.
It released selected preliminary – and unaudited – figures from the first half of 2021 two weeks ago, saying it expected underlying earnings before interest, tax, depreciation and amortisation to be in the $390m-$410m range.
That would be a 34 per cent lift on the first half of 2019, which Viva said was a better comparison than last year’s Covid-affected results.
Petrol volumes lifted 4 per cent for the half compared with 2019, with diesel sales up 16 per cent.
Expressions of interest close on August 12.