Z Energy fuel station outlets on market

Two companies owned by wealthy couple Barry and Diane Rissetto are selling their portfolio of 23 service station properties throughout New Zealand.

In recent years they have bought the Z Energy and other service stations through their companies Gasoline Properties and Norak Properties. The energy stations on high-profile main road locations include 21 Z Energy outlets and two more operating under the Mobil and Waitomo Energy brands.

Z Energy is listed on the New Zealand and Australian stock exchanges, and in its 2018 annual report, Z Energy discussed whether petrol retailing was a "sunset industry". One of the reasons it recently spent $46 million for a controlling stake in wholesaler Flick Electric was to diversify its interests.

"We can see the sunset coming. This is not a blind-disruption scenario. We have the time to prepare...Returns can still be attractive in an industry in decline. "In our industry, we'd have minimal excess capacity (terminal storage facilities) and low price elasticity of demand.

Consolidation can occur, and Z has already done this – with possibly more to come." Z Energy supplies fuel to retail customers as well as large commercial customers like airlines, trucking companies, mines, shipping companies and vehicle fleet operators. As the tenant on 21 of the properties, Z Energy supplies around 43 per cent of New Zealand's total fuel needs across the Z and Caltex branded networks.

Z Energy's property sales are stated within its annual reports which provide details about their values and square metre rents. The company's share price has eased recently from highs of $8 about 12 months ago to $6.20 a share. The 23 freehold properties return about $3.5 million in rent a year annum from the leases in place, which, across the whole portfolio, have a weighted average lease term of 6.43 years.

Investors are being offered the opportunity to purchase any number of properties, from a single service one to all of them. Jason Seymour, capital markets director at Colliers International, said it was a chance to secure some of New Zealand's most visible and well-frequented properties across a geographically dispersed area. Some properties had four year leases and others as long as 14 years, he said.

"Each service station offers exceptional tenant covenant, a prime location and a long-term lease with locked-in rental growth. "Due to the portfolio's size and scope, the vendor is offering significant flexibility to buyers. There are 11 properties in the North Island, including in the Far North, Bay of Plenty, Gisborne, Hawke's Bay, Manawatu, Taranaki and Wairarapa.

The other 12 properties are in the South Island, with half in Christchurch and the remainder in Blenheim, South Canterbury, Otago and Southland. Rental reviews include fixed increases of 2 per cent to 2.5 per cent a year, with market reviews either on renewal and/or every fifth, sixth or seventh anniversary. Offers by way of deadline private treaty close at 4pm on Wednesday April 24, unless the properties sell earlier.