Z stations for sale to pump cash back into firm
Z ENERGY is selling nine more of its service stations to raise cash for further investment in the business.
The listing with Colliers International follows the sale and leaseback of seven North Island Z and Shell-branded service stations to an Auckland-based investor for $8.87 million at a 7.75 per cent yield.
The latest batch are in Tauranga, Rotorua, Ngatea, Paeroa, Te Aroha, Hawera, Opotiki, Blenheim and Dunedin.
These will also be leaseback sales so the stations will remain part of the chain. The deadline for offers is October 31.
The stations offer net annual rental income ranging from $41,000 to $179,000 on initial lease terms of three to 12 years.
Z Energy asset manager Gail Calder said the sales were part of its long-term plan to enable further investment in capital to support the growth of its core business.
“It’s an opportunity for us to direct capital into building new sites, while at the same time keeping these stations operating under the Z brand as part of our network.”
Colliers agent Peter Herdson said it was an opportunity for investors to diversify into commercial property through investing in one or more smaller properties backed by a national brandname tenant.
“With interest rates at low levels, we believe there are many people around New Zealand look- ing for solid investments which could generate a higher yield than that available on bank deposits.
“With Z committed to these sites and recently rebranding them as part of their nationwide brand rollout, these properties provide income security for investors, and offer income growth from regular fixed and market rent reviews,” he said.
Owned 50:50 by Infratil and the New Zealand Superannuation Fund, Z Energy operates a network of more than 300 service stations and truck stops around New Zealand, along with pipelines, fuel terminals and a share in the Marsden Point oil refinery.
The company also distributes about a third of New Zealand’s fuel and claims one of the highest overall market shares of any fuel company in New Zealand.
The rebranding of the former Shell station network was completed earlier this year.
Colliers agent Jason Seymour said he expected inquiries from individual investors, family trusts and property investment syndicates looking to buy one property or several.
“Taken individually, or as a mini-portfolio of two or more, the properties offer simple investments in a popular asset class.
‘‘The properties, with their single corporate tenant, constitute easy-to-manage investments – a factor that will be a further draw for individuals and family trusts,’’ Seymour said.
‘‘The rental growth built into all the leases will be particularly attractive to many investors. All properties offer 2.5 per cent fixed annual growth for some years, combined with market rent reviews upon renewal and/or partway through the lease term.’’
The geographic spread of properties made it a ready-made diversified investment for buyers considering buying more than one service station.
“The properties are well-located . . . and occupy high-profile sites carefully chosen for their volumes of passing traffic and proximity to arterial roads and most are corner sites,” he said.
The 3033 square metre Ngatea property will generate net annual rental income of $124,000 on a new six-year lease with six further rights of renewal of six years each.
Te Aroha is a 756sqm property, which will have a net annual rental income of $41,000, and is offered with the same lease terms.
Paeroa is a 759sqm property with an eight-year lease with eight rights of renewal of four years each and it will pay $65,000 in net annual rent.
The 2015sqm Tauranga station will generate net annual rent of $119,000 on a new eight-year lease, with eight further rights of renewal of four years each.
Z Te Ngae, is a 1593sqm Rotorua property with a three-year lease with the right to renew for six more six-year terms, paying an initial net annual rent of $82,000.
Z Opotiki, covers 2117sqm and will generate $48,000 in net annual rental income on a 12-year lease, with six more rights of renewal of six years each.
Z Hawera occupies a central 2024sqm site and will return a net annual rental income of $179,000 on a 12-year lease, with six more rights of renewal of six years each.
Blenheim’s Z Redwood covers 1965sqm and will generate net annual rental income of $119,000 on an eight-year lease with four rights of renewal of eight years each.
Dunedin’s Z Valley in Kaikorai Valley Rd is a 3586sqm property which will generate $152,000 in net annual rent, with Z holding an eight-year lease with the right to renew for four more terms of eight years each.