Self-funded retirees continue to snap up NSW 7-Elevens service stations, drawn by high yields

By Larry Schlesinger
Wednesday, 28 March 2012

Ten NSW 7-Eleven service stations have sold at auction, with the assets again proving popular with retirees with self-managed super funds due to their high rental yields.

The 10 petrol stations sold in a price range from $2.2 million to $3.9 million, with yields ranging between 5.75% and 7.7% and an average yield of 6.81%.

A 2,335-square-metre petrol station on the Princess Highway in Dapto near Wollongong, which returns annual rent of $320,000, sold with the top rental yield for this tranche of 7.75%.

The first and second tranches of stores were auctioned in March and July last year and achieved average yields of 6.96%. A third tranche was auctioned in November and achieved an average yield of 6.54%.

The full list of NSW services stations is:

	Size	Annual rental	Yield
South Windsor, 735 George Street	47,370 sqms	$250,000	6.89%
Roseville, Cnr Pacific Highway & Boundary Street	2,598 sqms	$250,000	6.05%
Bankstown, 180 Stacey Street	4,465 sqms	$320,000	7.33%
Greenacre, 301-313 Hume Highway	8,268 sqms	$300,000	7.01%
West Pennant Hills, 552 Pennant Hills Road	955 sqms	$160,000	7.10%
Parramatta, 81 Victoria Road	2,802 sqms	$170,000	5.75%
Dapto, 125 Princess Highway	2,335 sqms	$200,000	7.75%
Newport, 307-311 Barrenjoey Road	1,435 sqms	$250,000	7.01%
Burwood, Cnr Shaftsbury Road & Parramatta Road	4,549 sqms	$170,000	6.43%
Minchinbury, 815 Great Western Highway	2,419 sqms	$250,000	6.79%

The latest group of NSW properties was sold as part of a sale program kicked off by 7-Eleven following its acquisition of 295 service stations from Mobil Retail in May 2010.

Since acquiring the Mobil business, 7-Eleven has been converting the Mobil stores into 7-Eleven service stations with attached convenience stores.

All properties come with new 15-year leases to 7-Eleven with three further renewal options of five years each and 4% annual fixed rent increases. The tenant pays all outgoings except land tax.

“Over the past 12 months we have consistently achieved yields of between 6% and 7%, which is an indication of how stable these assets are,” says John Macree, NSW head of sales and investments at Jones Lang LaSalle.

Macree says retirees with self-managed super funds were again prominent buyers at what was a well-attended auction.

At least one NSW service station was sold to an interstate buyer.

“Investors are seeing the importance of having solid long-term investments with a long-term stable income stream. That is particularly important for those planning for their retirement.”

To date, Macree says about 80% of the buyers at 7-Eleven auctions have been self-funded retirees.

“Of those, about half were investing through a self-managed super fund structure,” he says.

This is the second time in that past six months that 7-Eleven has achieved a 100% clearance rate at auction. The company sold 10 service stations in Sydney last November.