COMMERCIAL PROPERTY, SALES & LEASING

Tarneit offers strong long term returns

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MELBOURNE-based developers Strinzos Property Group and Dacland have put a brand-new 7-Eleven and KFC-anchored retail complex in Melbourne’s west to the market, offering nearly $1 million in annual rent that is expected to grow by more than 50% over 15 years.

Located in Tarneit, the 10,000 sqm-plus Tarneit site at the corner of Derrimut and Dohertys Road includes the 7-Eleven petrol station and convenience store, a ground lease to KFC, Magic Carwash and seven individual food tenancies with an 11.3-year weighted average lease expiry.

It returns annual rent of circa $972,000 per annum net on an 11.3 year WALE.

Stonebridge Property Group’s Justin Dowers, who is managing an expressions of interest campaign for the property with Rorey James and Kevin Tong, said the sale “could hardly have come at a better time”.

“Yield has become very hard to find as have quality assets. If you can locate an asset that also offers a very strong lease profile including, arguably, recession-proof convenience centres, you jump on it.”

The property’s rental income is estimated to grow 51% over a 15-year investment horizon based on the fixed annual rental increase to all tenants, according to the agents, while Dowers said the underlying land component of convenience centre coupled with the major growth occurring out in the west will be very attractive to investors.

“This is one of the most strategically located convenience centres in the west of Melbourne given its significant corner exposure on both Derrimut and Dohertys Road. The position will continue to benefit from greatly increased traffic flows as more and more residential houses are being developed in the area,” James said.

The property has exposure to nearly 34,200 vehicles per day and is surrounded by new residential housing being developed by groups including PEET and Dahua, with over 12,000 lots within the immediate catchment.

It comes soon after a retail complex in Melbourne’s northern suburb of Craigieburn anchored by a 7-Eleven and Red Rooster and an adjoining development site sold for $20 million to an investor and developer. Completed in 2018, the centre is on 6,215 sqm of land returns for a combined yearly rent of $777,429 from six out of seven available tenancies.

 

Stonebridge is also marketing 7-Eleven in Canberra, with the property to be sold with a 12-year net lease plus options taking the term out to 2052.

 

The site is strategically located at the gateway to the entrance of the Erindale Town Centre, anchored by Woolworths, along with other major retailers including McDonalds. It brings in a net income of $316,233 with guaranteed 3% income growth each year.

Dowers is selling the property alongside Phillip Gartland, Rorey James and Kevin Tong, said that with the planned nature of Canberra’s suburbs mostly accommodating one service station within its respective shopping centre precinct, the ability for fuel competition to enter the catchment was almost non-existent.

The property is on a 3,378 sqm landholding on the corner of Ashley Drive, McBryde Crescent and Gartside Street. It was formerly an Exxon Mobil, before its retail business in Australia was acquired by 7-Eleven in 2010.

Expression of interest campaign close early December.

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