JLL is set to test investor demand in the retail convenience market, through launching a showcase of best-in-class freestanding retail investments being offered to the market individually with a combined value of approximately $30 million.
Labelled “The Melbourne Convenience Collection”, the portfolio of tenants are all global brands and mostly located in Metro Melbourne. They include EG Ampol Oakleigh South, KFC Bairnsdale, BP Vermont, 7-Eleven Niddrie and 7-Eleven Altona North. For KFC Bairnsdale, this is the first time the property is being offered to market in nearly 40 years.
JLL’s Jarrod Herscu, Tom Noonan, MingXuan Li and Stuart Taylor have been appointed to run the campaigns on behalf of different private owners.
Jarrod Herscu, Senior Executive, “As the cost of debt begins to stabilize, we are anticipating significant interest in each asset, with a range of private, wholesale and listed capital sources looking to invest into the fast food and fuel sector”.
“Private buyers who are largely equity funded, are often acquiring in self-managed superannuation funds”.
For the larger wholesale and listed groups, whose outlook on the service station industry remains extremely positive, these groups in particular are attracted to the blue-chip covenant, long WALE and rental income growth. The Melbourne Convenience Collection ticks many if not all these boxes.”
In 2023 YTD, there has been $68 million in service station and fast-food assets sold nationally, showing an average yield of 5.29% and 4.25% respectively.
Locally the metro Melbourne market continues to be tightly held with no fast-food transactions and only two service stations changing hands at an average of 4.62%.
Tom Noonan, Director “All the assets being showcased have a highly defensive income profile, underpinned by strong underlying land value”.
“The average lease expiry across the assets offered is approximately 8 years and are leased to some of the world’s largest retail companies”. In addition, some of the assets have highly attractive CPI increases to provide a hedge against inflation.” Mr Herscu said.
Jarrod Herscu, “It’s an extremely exciting time in the fuel and retail convenience sector, specifically with the recent purchase of On The Run by VIVA Energy for a record $1.15 billion. For us this demonstrates clear confidence in the long-term performance of the sector and should certainly send a message to investors that the industry is in a strong position.”
Majority of the assets will be offered via Expressions of Interest Campaign closing 4:00pm AEST Thursday 1st June 2023
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