Service stations pumped into portfolio auctions

The Shell Coles service station at Morwell in Victoria.

The market for petrol station investments continues to pump along, with another four properties to be auctioned off at commercial agency Burgess Rawson’s next investment portfolio auction.

The four service stations – three in Victoria and a rare Northern Territory offering – will be put on the block on October 24 as part of a larger collection of commercial properties up for sale.

And it’s the long leases to major tenants on prime sites that continues to underpin their appeal to investors, Burgess Rawson director Jamie Perlinger says.

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“The retail fuel sector now ranks amongst the most sought-after commercial investments in Australia,” Perlinger says.

“They have landlord-friendly long-term leases, most have fixed rental increases, potential depreciation allowances and the majority are underwritten by major international companies and national fuel chains.”

“Fuel is a nondiscretionary purchase. Businesses and individuals need it in most cases daily. The number of car owners across the country continues to increase, fueling demand for it.”

The BP service station at Kangaroo Flat will be auctioned on October 24.

Two sites in and around the Victorian regional hub of Bendigo could be the pick of the properties.

One of them, at Kangaroo Flat, is leased to BP and adjoins a McDonald’s restaurant, attracting a combined 31,000 passing cars each day.

BP’s lease runs until 2028, with further options to 2048, and is currently worth more than $240,000 annually.

A Caltex station in another Bendigo suburb, Kennington, is also up for grabs, with a lease to Woolworths running until at least 2026, with options to 2046.

Perlinger says Bendigo makes a compelling case for investment.

“Greater Bendigo is Victoria’s third largest urban centre with a growing population of over 113,000 and forecast to increase to 145,000 by 2031,” he says.

The huge Puma Energy service station at Katherine in the Northern Territory.

“It is a unique opportunity to have two service stations available for purchase in this expanding regional city, one of which is a gateway site.”

Another station at Morwell in regional Victoria will be sold with a 10-year lease to Wesfarmers-owned Coles Express.

But the biggest price could come for the Puma Energy site at Katherine in the Northern Territory, with a massive 2.14ha landholding, 246m road frontage and its position on the major freight route between Adelaide and Darwin.

A brand new property, it returns annual rent of $685,000, with fixed annual increases of 3%.

The Burgess Rawson investment portfolio auctions will be held in Sydney and Melbourne on Tuesday, October 23 and Wednesday, October 24.