Two sell as 7-Eleven tempts investors

A private investor has paid a premium for two 7-Eleven sites in Melbourne, due to have been auctioned by Jones Lang LaSalle as part of a batch 15 stores on July 20.

The two early sales are the 2,738-square-metre Blackburn South site at 2 Canterbury Road with annual rent commencing at $140,000 and the 1,463-square-metre Lilydale site on the corner of Maroondah Highway and Cave Hill Road, bringing in $130,000 in annual rent.

Jones Lang LaSalle agent Steve Bolton says the net yield on the Blackburn site is 6.98% and the net yield on the smaller Lilydale site 8.45%.

The sale prices are undisclosed but did meet price expectations.

Prices are expected to range between $1.5 million and $4 million for the eight stores in the Sydney metropolitan area and the remaining five in the Melbourne metropolitan area.

Bolton says the Lilydale and Blackburn properties were sold ahead of auction on the basis that the price offered may not be achieved on auction day.

Premium offers for other sites that exceed auction expectations may also be considered ahead of the July 20 auction.

“Each offer will be considered on an individual basis,” he says.

Jones Lang LaSalle agents Ben Galanos and John Macree, along with Bolton, are marketing the remaining sites, which are expected to yield investors returns of between 7.5% and 8.5% on passing rentals.

The stores, purchased as part of 7-Elevens acquisition of 250 retail sites from Mobil Retail in 2010, each include service station, convenience store and customer parking.

All stores come with 15-year leases to 7-Eleven with renewal option of three times five years and offer fixed annual rental increases of 4%. 

Bolton says there has been “excellent interest” in the retail sites, which Jones Lang LaSalle has been selling in tranches on behalf of 7-Eleven since early 2011.

Expressions of interest in the latest batch of stores up for sale have come from a range of potential buyers including petroleum operators, superannuation groups and some institutions.

Though they are being sold of individually, Bolton says they can be bought in batches.

“The sale can be tailored to suit the buyer,” he says.

Tenants of the stores pay all outgoings except land tax.

The eight NSW stores range in size from the smallest in Kensington, Sydney on the corner of Anzac Parade and Todman Avenue, which is 1,429 square metres and offers annual rent of $150,000, to the South Strathfield store at 577 Liverpool Street, measuring 4,998 square metres and offering returns of $200,000 in rent annually.

The smallest Victoria store is in Bayswater East, on the corner of Dorset Road and Mountain Highway, measuring 1,932 sqm and generating annual rent of $140,000, and the largest is the 5,575-square-metre Hoppers Crossing store on the corner of Old Geelong and Heaths roads, returning $210,000 per year.

The tranche of 15 will be sold by public auction on July 20, 2011.

Since being purchased by 7-Eleven, the properties have been refurbished and re-opened as 7-Eleven stores.

Earlier this year, seven properties in Thomastown, Clifton Hill and Noble Park in Victoria, Blacktown East, West Gosford and Long Jetty in NSW and Robina in Queensland were successfully auctioned by Jones Lang LaSalle with net yields ranging between 7.28% and 7.95%.

Jones Lang LaSalle director David Bowden says since March some sites have been sold on an individual basis and demand among investors has been strong.

“The purchasers have been attracted by land rich investment properties in prime locations with secure long-term leases and fixed rental increases,” he says.

7-Eleven Stores is the biggest convenience retailer in Australia, operating about 600 stores, and is owned by the Withers/Barlow family.

It ranks in the top 30 of BRW’s Top 500 Private Companies listing.

What’s for sale: