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SECTION: REAL ESTATE INVESTMENT TRUSTS & FUNDS

APN unveils $323m Convenience Retail trust

MOVE over Viva Energy REIT, there is a new petrol station property trust in town with APN Property Group revealing the make-up of its Convenience Retail REIT, which will have a portfolio of 67 properties worth $323 million.

The group lodged a product disclosure statement with ASIC on Friday, and revealed that 65% of the portfolio will comprise Puma Energy Australia sites.

Both APN and Puma Energy Group intend to hold a “significant” investment in the trust, with APN and associates looking to hold up to 15% in stapled securities and Puma between 5% and 10%.

“Puma Energy Australia has planned expansion of its retail network in Australia into complementary locations in Queensland and Western Australia plus strategic expansion into New South Wales and Victoria, and Convenience Retail REIT expects to participate in this future growth,” APN CEO Tim Slattery said.

The REIT will have first right of refusal over any site Puma acquires, develops, sells or disposes.

At the end of 2016, Puma operated 2,519 services stations in 47 countries and generated US$12.7 billion in annual revenue.

Woolworths sites will make up 18% of the portfolio; 7-Eleven 6%; Caltex 3%; Viva Energy Australia 1% and the remainder to complementary service providers including McDonald’s, KFC and Subway.

APN Funds Management Limited will be the responsible entity of the REIT, and APN will be entitled to annual management fees of 65 basis points of the gross asset value of the REIT.

It is expected to have a 13.0-year weighted average lease expiry, 7.2% weight average capitalisation rate, 2.8% weighted average annual rent reviews, and initial gearing of 30%, with a target range of 25% to 40%.

The trust will have a forecast annualised distribution yield of 6.50% for the 2018 financial year, increasing to 6.75% the following year with a payout ratio of at least 95% of funds from operations and quarterly distribution.

Merrill Lynch and UBS will oversee the float.

APN will at the very least by hoping to emulate the solid performance of the Viva Energy REIT, which became the country’s first pure-play service station trust upon listing last year.

Yesterday, Viva announced it has acquired eight Shell service stations for $89.1 million, on a cap rate of 5.6%, taking its portfolio to 437 properties and a total value of $2.22 billion, with a further 10 properties worth $45 million in due diligence.

Viva subsequently revised its distributable earnings per security guidance for the year ending December 31st, 2017 upwards from the PDS forecast of 13.07c to 13.2c.

Australian Property Journal

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