Caltex sells portfolio of 25 service stations for $136 million, or $92 million after costs

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.

CBRE’s Mark Wizel and Julian White with Lincoln Blackledge, from Stonebridge, represented the vendor.

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 Clayton will soon be closed, remediated, and redeveloped with apartments.

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

382-386 Lygon Street, Brunswick East, Victoria

793-797 Whitehorse Road, Box Hill, Victoria

147 Koornang Road, Carnegie, Victoria

409 Clayton Road (corner Centre Road), Clayton, Victoria

484 Canterbury Road, Brentford Square, Forest Hill, Victoria

521 Nepean Highway, Frankston, Victoria

793-797 Whitehorse Road, Mont Albert

281 Gaffney Street (corner Derby Street), Pascoe Vale, 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.

Share or Recommend article

Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco