In February, the trust sold a Toowoomba service station, which was leased to Freedom Fuels, for $3.5 million. Rick Bird of Ray White Transact negotiated both deals. He said the Ipswich service station at 126 Warwick Road was a particularly appealing investment because the yearly rent of $148, 632 had just been paid in advance and the tenant was a national company.

The sale reflected a yield of 8.26 per cent.

The property sold in an off-market transaction after Bird contacted a private investor he knew was looking for a property in that price bracket. He said the Toowoomba-based investor owned significant residential assets but this was his first non-residential property.

Mr Bird said the plan by the trust had always been to sell off a few of the service station assets, after they had been held for a number of years, to reduce debt. “It (the property) had been completely renovated late last year,” Mr Bird said.

It was rebranded from an Ampol to a Caltex service station at the same time. The property, on a 3033 sq m site with frontage to Warwick Rd, is leased to Caltex until April 2016 with two five year options in place.

Mr. Bird is marketing another service station at Withcott with an asking price reduced to $2.6 million.

Rick Bird, of Ray White Transact, negotiated the sale to Dennis Hughes Holdings. He said it was offered to the market with another service station at Withcott but that had not sold yet. ‘‘There was good interest in both of them but the one at Withcott, we did not get a satisfactory offer at this stage,’’ he said.

Mr Bird said the majority of potential buyers of the centres were from Queensland. He said there were a lot of people interested in owning service stations, many of them former operators who understood the business.

‘‘There is a lot of people that own a portfolio of 10, 20 and 30 service stations and they really concentrate on them,’’ he said.

‘‘Ray White Invest was interested in getting a service station portfolio and picked up some 12 throughout Australia and this (the Toowoomba station) is just one of that portfolio.’’

The freehold service station is leased to Freedom Fuels until May 2016. It is on the northern fringe of the Toowoomba CBD and includes a convenience store.

Mr Bird said it was a relatively new centre, having been built in August 2002. It currently attracts a net income of about $300,000. There are eight six-hose pumps and a dual LP gas dispenser.

The group has just put $1.5 million into a new unlisted trust from Ray White Invest and the cash return, once the project is completed is expected to be about 15 per cent.

We were oversubscribed,” said Ray White Invest chief executive Dan White.

“A number of subscribers are saying they cannot have their savings earning 2 to 3 per cent indefinitely. Sooner or later, their capital has to work harder.”

The development in Sharps Road at Tullamarine, will consist of two buildings – 580 square metres in all – pre-leased to leading operator National Storage for 15 years.

Mr. White said the valuation metrics had “changed a lot” from the initial numbers but “it still made sense.”
The project’s end value of $9 million is based on a yield of 8.5 per cent, which is a lot higher than it would have been 18 months ago.

But that is not the real attraction of the deal. The lure is that by leaving the development profit in the project, investors can gain a supercharged cash-on-cash return.

The project is being managed by R&J Developers. The investors including Ray White Invest, inject about $1.5 million in equity and Westpac Banking Corp has provided the debt funding.

Mr White said Westpac had given strong banking support but acknowledged that the margin on the loan was more than planned and that the bank had done many more checks than it would have in the past. “The LVR [loan to value ratio] is low and the interest cover is high,” he said.

As well as the initial yield, investors will also share in profit on the project when it is eventually sold, presumably when the property market is stronger than today.

“There is still support for well structured property investments with a medium-term view,” Mr White said.

Ray White Invest picked up the portfolio of mail distribution centres from Australia Post for an undisclosed price in an option deal in March.

The fund manager then on-sold the properties to separate private buyers for a total of $14.65 million over the course of the year. These sales reflected an average passing yield of 6.73 per cent a year.

The properties are leased back to Australia Post on a variety of lease terms of up to three years plus options, which offered some certainty in the volatile market.

“We decided to offer the properties on an individual basis as a result of changing market conditions,” Ray White Invest project director Hans Pearson said.

“We felt confident in selling them individually to the private investor and owner occupier market because of their size and excellent location within established business and industrial parks.”

The properties sold to private investors and owner occupiers at between $1 million and $4 million.

“We have certainly seen a stronger level of demand by breaking up the portfolio. Even so, the level of demand at that end of the market was noticeably weaker by the end of the campaign then where it was at the start,” Mr Pearson said.

Ray White Transact’s Rick Bird sold four of the eight properties.

“We were very pleased to sell all the assets in a very challenging market. The strategy of tailoring the product for the private investor market has served us well,” he said.

An Australia Post spokesman said the sale to Ray White Invest had been a strong result as it had dealt with a proven counterparty and secured its occupancy requirements for the medium term.