Caltex – whose management last week rejected a takeover bid from Quebec’s Alimentation Couche-Tard, saying the $A34.50 per share offer under-valued the company – has sold a portfolio of 25 Australian service stations, for $136 million.
The sites were identified as having a highest-and-best use outside of selling petrol.
Targeted to residential developers, the properties were offered with upcoming vacant possession.
Interestingly, 10 are selling to Woolworths which it is expected will replace them with supermarket-based retail assets, possibly containing residential.
Oliver Hume, on behalf of an Asian investment group, is acquiring 12.
Three other development groups each purchased a single site.
Caltex must remediate each of the blocks within 24 months.
Following these costs, and Capital Gains Tax, the petroleum giant expects to bank about $92 million from this property portfolio disposal.
Next year Caltex intends to sell more service stations, part of plans to recover about $500 million from its real estate assets.
Last November, we reported Caltex offloaded two petrol outlets with leasebacks, in Melbourne’s Avondale Heights and Rowville – banking a total of $7.8 million.
In August we reported Caltex was considering relocating its national office headquarters outside of the Sydney CBD.
Caltex portfolio sold above $120m expectation
Fifteen petrol stations within the Caltex’s development portfolio are in New South Wales, with eight in Victoria and one each in Queensland and Western Australia.
The properties were selected for being close to transport, schools and in some cases, town centres.
The assets are located in some of the country’s most desirable locations including Surfers Paradise and in Sydney, at Bondi and Drummoyne.
In Melbourne, sites were offered in Box Hill – (where Grocon recently built a 20-level office for the ATO on the site of a 7-Eleven petrol station) – and inner north Brunswick East (pictured, top).
Mr Wizel said the developers were attracted “by strong locations, the lack of development site options, predictions of housing under-supply and the licence agreement [with Caltex] that offered an income well above what they were currently returning on cash in the bank”.
It could be the case that the purchasers flip the sites once they are remediated, permitted for redevelopment, or rebuilt.
“Given widely forecast predictions of a looming undersupply of apartments, purchasing one or more of these sites was an ideal way to build a pipeline to cater to pent up demand whilst generating an attractive income in the interim,” Mr Wizel said.
“The market’s response to the campaign was not surprising, indeed it was a clear indication that confidence is returning to the residential development sector on the back of what has been perhaps a surprisingly quick rebound in housing prices across key markets”.
Mr White added that the purchasers had the option of buying individual sites, sites in any combination, or the portfolio as a whole.
More to come: Caltex
Caltex chief development officer David Bridge said the result for the initial 25 assets “unambiguously vindicated the divestment strategy involving a portfolio of 50 well located properties”.
“These sites had been identified as having a higher and better, non-fuel related use and obviously the market is in accord with that rationale,” the executive said. “Given the success of this first tranche of sites we are very confident in putting to market another 25 sites across Australia early next year”.
Separately, the group is looking to create a real estate investment trust containing more of its service stations.
The assets which sold
793-797 Whitehorse Road, Box Hill, Victoria
222 Tongarra Road (corner Calderwood Street), Albion Park, NSW
51 Bondi Road (corner Park Road), Bondi, NSW
646 Hume Highway, Casula, NSW
369-375 Concord Road, Concord West, NSW
191-195 Lyons Road, Drummoyne, NSW
116 Victoria Road, Gladesville, NSW
287-295 Victoria Road (corner Stansell Road), Gladesville North, NSW
240 Maitland Road, Islington, NSW
125 O’Riordan Street, Mascot, NSW
225 Woodville Road (corner Lackey Street), Merrylands, NSW
Luxford Road (corner Mount Street), Mt Druit, NSW
26 Enmore Road, Newtown, NSW
98 March Street (corner East Market Street), Richmond, NSW
488 Old South Head Road (corner Albemarle), Rose Bay, NSW
414-416 Prices Highway, Sylvania Heights, NSW
73-75 King Street (corner Hoskins Street), Warrawong, NSW
141 Wellington Street (corner Hill Street), Perth, WA
2885 Gold Coast Highway, Surfers Paradise, Queensland.
Service station investors spoiled for choice recently, too
Caltex’s sell-down comes six weeks after we reported the Withers family, which owns 7-Eleven’s Australian franchise, sold 15 national service stations with leasebacks, for a total of $77.9 million.
The 7-Eleven assets traded on yields of between 3.82-6.07 per cent following a Burgess Rawson campaign.
In 2014, the family sold another 15 7-Eleven outlets with leasebacks, reaping $71.1 million.