Fuel stop: Caltex offers $120m of servos for sale

Fuel giant Caltex has wasted no time in offloading multiple metropolitan service stations it says would be better suited to apartment developments.

After telling investors two weeks ago it would sell 50 fuel outlets it identified as having “higher value through alternative use,” Caltex has now put half of them up for immediate sale either as a portfolio or individually.

If sold in one line, the petrol stations and convenience stores are likely to fetch around $120 million.

They include prime Sydney sites in Rose Bay, Bondi and Mascot and similar sought-after city outlets in Brunswick East, Carnegie and Box Hill in Melbourne.

Caltex chief development officer David Bridger said the first tranche of the sale of 50 freehold metropolitan sites was aimed at apartment and mixed use developers.

“These sites are ideal for low to medium rise apartment development, located in attractive, high demand areas with strong growth opportunities,” he said.

“They also possess long-term development prospects which will appeal to a large number of prospective buyers who are looking at delivering a range of different end products into the inner metro markets,’’ he said.

Agents CBRE and Stonebridge are managing the sale process.

The 16 NSW servos, seven in Victoria, one in WA and another on the Gold Coast are mostly located on corner land holdings ranging in size from 1200 to 2500 square metres.

Caltex mooted the sale at the same time it reported a substantial drop in half-year profit last month.

“We are responding to the tough conditions through a focus on capital discipline and by sustainably reducing our cost base,” chief executive Julian Segal said at the time.

All the services stations will be remediated by Caltex, reducing a key risk for investors concerned about the environmental legacy, CBRE’s Mark Wizel said.

Mr Wizel said the sites, all with commercial zoning, would suite boutique apartment developments between 40 and 100 units in size or, potentially, other uses such as retail.

“I can see great demand. It wouldn’t surprise me if a group like Mirvac stepped up and bought the portfolio,” he said.

Morgan Stanley analyst Adam Martin, assessing Caltex’s half-year performance, said it was not “unreasonable to assume” the sites were worth up to $5 million each and sale of the 50-strong portfolio could reap the fuel and convenience retailer up to $250 million.

“We view the property disposal strategy as sensible and agree with Caltex that appetite should be high,” he said.

Mr Martin said Caltex will review another 240 sites “so it’s likely there will be further property disposals over time.”

“This will help Caltex’s balance sheet and offers the potential for more buybacks,” he said.


Extracted from The Sydney Morning Herald