Woolworths has raised $15.3 million through the sale and leaseback of 10 Woolworths Petrol sites across NSW and Queensland, with the funds to be used for expansion of other operations, including its push into the smaller convenience style stores.
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The supermarket giant has followed the same path as 7-Eleven, which has raised more than $200 million over the past three years in sale and leaseback deals.
The rationale is to take so-called idle cash that is tied up in owning the assets off the balance sheet and using the funds raised for other developments across the business.
Woolworths auctioned the petrol sites, ranging from Scone in rural NSW to Katoomba and down to Bega, on a leaseback basis, through JLL director in charge, Parramatta, John Macree.
They were sold with long-term ground leases to Woolworths Petrol.
The Sydney-based auction received strong interest from investors, achieving an average net yield of 5.1 per cent.
Woolworths has divested over $2.8 billion of property assets since 1 July 2010, including the creation of the Shopping Centres Australasia Property Group in December 2012 and the sale of 54 freehold properties by ALH Group Pty Ltd in September 2014.Macree said
Woolworths director of Property, Ralph Kemmler said, Woolworths' preference is to enter into long term leases over its premises rather than holding property assets and the supermarket giant will continue to review opportunities to act on our portfolio.
"Investors are recognising that purchasing a quality investment property provides a higher return than leaving money in the bank. The auction results are a testament to that," Mr Macree said.
"Off the back of the recent interest rate cuts, these types of assets are likely to attract more investors into the property market and away from the volatility of the equities market and low returns from banks."
Mr Macree said service stations, as an asset class, had been highly sought after by self-managed super funds, retirees and private investors as they offered long-term cash flow and a secure long-term tenant.
"The low interest rate environment has triggered demand for higher yielding investments and the buyers of the Woolworths assets, being individuals, said they wanted income generating properties with the potential for capital growth," Mr Macree said.
