Service stations with convenience stores attached are shaping up among this year’s best set-and-forget freehold investments as the balance between Australia’s 21 million fuel cars and 83,000 electric vehicles (EV) cars continues to shift.
EV charging stations are Australia-wide. But for now, many sport just one or two outlets which led to lengthy delays over the most recent summer holiday period. Moves being made to rectify the situation include the NSW government’s commitment to build more than 100 charging stations over the next four years. (Private installers of charging stations cannot yet make a return on investment without government assistance, director of VE Charge Michael Brewitt told The Guardian earlier this year.) In this regard, fuel giant Ampol has entered into a funding agreement with the NSW government to deliver EV fast charging infrastructure throughout the state and install 110 fast charging bays at 19 of its AmpCharge sites. These sites will be located on key commuter routes and offer a minimum of four charging bays - up to 10 in places identified as EV driver hubs. The move is in line with Ampol’s intention to create the leading network of EV charging stations in Australia by 2030. BP Pulse has 22 fast-charging stations nationwide and plans to add 100 more by the end of this year.
Convenience = customers
7-Eleven is a major driver on the convenience store side of the equation. The retail operator opened 22 new sites in 2022 and last October signed an 11-year agreement with Mobil Australia to extend an existing agreement resulting in Mobil fuels being sold at 7-Eleven convenience stores until 2033. 7-Eleven’s retail sites in general continue to perform strongly, and in future will be driven by moves into building its retail media network. This has been kickstarted in the US where 7-Eleven’s massive loyalty program has more than 80 million members, delivering the chain an enormous amount of data useful to advertisers who can, for example, utilise it to target buyers of caffeinated drinks who eschew coffee or cigarette smokers who want to quit.
The success of such outlets as 7-Eleven comes down to being ‘one stop recession-proof shops’ said Burgess Rawson partner Jamie Perlinger. A good example was the 7-Eleven asset in the Sydney north shore suburb of Killara which sold under the hammer at the agency’s last Portfolio Auction for $7.5 million reflecting a yield of 3.96%.
“This was an exceptional result in light of rising interest rates and a fall in retail trading,” Mr Perlinger said. “The sale demonstrates yet again what a stable and strong preforming asset retail convenience is.”
Fuel rules
Back on the fuel side, heavy weight Viva Energy, owner of Shell service stations, has announced intentions to purchase its sites’ Coles convenience stores in 2023. This purchase is designed to give Viva Energy a larger retail footprint while accelerating customer engagement.
Such a move helps create a set-and-forget proposition for investors Mr Perlinger said. “Combining essential services such as fuel and convenience can secure an exceptional investment opportunity that offers secure long leases and top-tier tenants,” he said. “This represents a set-and-forget freehold investment with guaranteed rental growth. These properties are malleable and value-adding due to their locations, so have been highly contested at our auctions.” Mr Perlinger added that several of these companies recorded strong profits over the 2022 year citing Ampol’s after tax net profit of $732.3 million compared with $297.8 million profit the previous year.