Brokers say a BP station for sale at Gisborne can offer its next owner a split-risk investment, strong tenant covenant and new 12-year lease.
Colliers International is selling the 2294sq m freehold property at 192 Ormond Rd, Mangapapa. The sale is to be by deadline private treaty, with offers closing 4pm on August 29, unless sold earlier.
Standing on a large corner site with excellent frontage, the property serves the residential area of Mangapapa plus Gisborne's wider northern suburbs.
Colliers' capital markets team members Jason Seymour, Philip Searle and Brian Shields are marketing it with Gisborne-based Hayden Houthuijzen.
Seymour sees the opportunity to acquire a low-risk, long-term investment with both structured and market rental growth.
"This is a modern suburban service station with a recently refurbished retail shop, expansive canopy, six petrol pump lanes, and a standalone high-flow diesel pump," he says.
"On one of Gisborne's main arterial routes, its 2.5km from the CBD. It signed to a new 12-year lease to an experienced national operator with established supply agreements.
"A workshop and LPG bottle filling facility on the property are occupied by a separate tenant on a six-year lease. Both leases earn a net annual passing income of $117,800, with attractive structured rental growth," says Seymour.
The property is on two freehold titles with extensive frontage to Ormond Rd, site being generally flat, with dual vehicle access to Sheridan St.
Searle says the property benefits from modern, high-quality improvements.
"The site originally developed in 1936 has since been extended and extensively refurbished. The workshop was constructed in 1975 and an extension completed in 2005.
"Major renovations in 2007 included a brand-new canopy, while a new office and modern new retail fit out were completed in 2016. The retail area includes a shop, food and coffee kiosk, product displays, and all necessary modern amenities."
Searle says the service station is leased to Number 8 BP Limited, a wholly owned subsidiary of Number 8 Retail Group.
Established in 2008, the company's portfolio of convenience brands includes Caltex, BP, FIX, Subway, Jesters and BurgerFuel.
Number 8 BP Ltd is signed to a 12-year lease returning $86,000 in net annual income, with structured rental growth of 4 per cent every two years.
This lease has six rights of renewal of six years each, with market rental reviews every 10 years. The final lease expiry date is in May 2066.
The workshop and LPG filling facility are on a six-year lease to L&F Sutherland, commencing in April 2017. This lease earns $31,800 in net annual rent, with rental reviews to CPI every two years, and market rental reviews on renewal.
Two rights of renewal, of six-years-each, extend the total lease term to March 2035.
The property is zoned General Residential.
The service station and workshop are non-complying activities, but enjoy existing use rights, says Searle.