7-Eleven auction extravaganza nets $78m

A one-day auction extravaganza of 15 petrol stations around the country has netted convenience and fuel retailer Russel Withers’ 7-Eleven group $78 million.

In tandem with Australia’s housing market picking up, recent interest rate cuts have fired up commercial property investors, with nearly 350 turning up at live-linked auction events in Sydney and Melbourne conducted by portfolio specialists Burgess Rawson.

The 7-Eleven stores, spread across New South Wales, Victoria, Canberra and Western Australia, sold on a weighted average yield of just 4.7 per cent, with four sites trading below 4 per cent.

A decade ago, following the fallout from the global financial crisis, yields for similar assets were around 8 per cent.

The stores included a 7-Eleven leased fuel site at Clyde on Sydney’s Parramatta Road which sold for $3.9 million.

Another with a drive-through service station with a McDonald’s onsite in Campbellfield on Melbourne’s northern outskirts netted $8.52 million on a 4.5 per cent yield.

A prominent site in Sydney’s Liverpool fetched the sharpest yield, just 3.82 per cent after selling for $5.75 million, while a fuel outlet Canberra’s Braddon went for $7.1 million.

Other sites on the block were in Mornington, Rockbank, Croydon and Ferntree Gully in Melbourne, Seven Hills, Colyton, Toongabbie and St Marys in Sydney, Holt in Canberra, Ellenbrook in Perth and Marks Point in Newcastle.

7-Eleven’s head of property Jimmy Mouzakiotis said the results reflected pent-up demand and strong investor interest in the fuel retail industry’s sought-after lease covenants.

The convenience retailer had signed new 12-year leases for all 15 properties and covers all rates, repairs, maintenance, building and public liability insurance.

The divestment would free up capital for 7-Eleven to reinvest in its expansion – it is adding around 30 stores annually, he said.

The group also has plans to upgrade 293 stores across its network, roll out a Parcel Mate program across 400 stores and has earmarked 13 fuel infrastructure upgrades this financial year.

Burgess Rawson director Billy Holderhead said the group received 850 inquiries across the campaign.

The next test for the market will be fuel giant Caltex’s stores. It is in the process of selling a tranche of 50 fuel outlets, putting just half of them up for sale initially.

If sold in one line, Caltex’s outlets are likely to fetch around $120 million.

By Simon Johanson from The Age