APN Acquisitions and a Strong Service Station Market

APN Property Group has announced its acquisition of six 7-Eleven service station sites in Queensland, with a total value of $59 million. The properties, located proximate to Brisbane and Toowoomba, reflect a blended yield of 5.5% on the purchase price and a WALE of 10.1 years.

The six sites will be added into the existing APN Convenience Retail REIT. The purchase will reflect approximately 9.5% of the total value of the fund on completion of the deal, which will reportedly comprise a total of 97 sites with an estimated value of $619 million.

The acquisition appears to further demonstrate the popularity of service station assets amongst institutional investors, as a result of their resilience shown in 2020 during COVID-19. In fact, the service station market appeared to have fared better than many other asset classes during the pandemic.

Private investors are also continuing to show strong demand in the service station market, with a recent Cushman & Wakefield portfolio auction seeing the sale of nine Woolworths Caltex sites for a total of $54.5 million, reflecting yields of between sub-3% to 5.75%.

With strong interest from both private and institutional investors for service stations during 2020 and continuing into 2021, it is likely that the resilience of service stations will continue to drive demand from investors into the near future. The lack of supply is likely to result in the fierce competition and strong auction results which we have observed throughout the last 12 months to continue. This will be an interesting sector to keep an eye on.