APN Property Group has purchased two more service stations for its Convenience Retail REIT (AQR).
Both are in Queensland – at Gordonvale, near Cairns, and Kingston, in Brisbane’s south.
The blended yield is 5.77 per cent.
The acquisitions will be funded by an institutional placement of up to $45 million and a $5m securityholder purchase plan.
The new properties
The priciest new asset, United Gordonvale, at 105-115 Cairns Road, is costing $18.4m.
Also with tenancies to McDonald’s and Subway, the initial yield is 5.77pc.
The Weighted Average Lease Expiry is 9.4 years.
Settlement is due next month; CBRE was the marketing agency.
The Brisbane asset, occupied by 7-Eleven and Zambrero, is being purchased for $10.2m – reflecting a 5.75pc initial return.
At 1 Juers Street, its WALE is 7.5 years.
Settlement occurred this month.
Elsewhere in the state, four months ago, the manager acquired half a dozen service stations for $59m on a blended 5.5pc yield.
Last September it purchased three more Coles Express-backed convenience retailers from Denmac – in Acacia Ridge, Moorooka and Cairns – for a total of $27.5m.
Last July, for AQR, APN paid $10.5m for the Brisbane Airport Link service centre, at Hendra.
That deal reflected a 6.15pc passing return (story continues below).
Also in FY21, the manager snapped up a portfolio of six South Australian petrol stations for $35.5m.
Big and getting bigger
In announcing AQR’s results today, fund manager Chris Brockett said all of its assets stayed open amid COVID.
“We expect service and convenience retail properties to remain highly sought after as a stable and defensive asset class due to their long leases, strong lease covenants and exposure to non-discretionary spending,” according to the executive.
The portfolio – 98 assets – is 90.6pc occupied with a WALE of 11.9 years.
It increased in value in FY21 to $184.5m – factoring in completed new acquisitions ($130.6m) and revaluations (which assumed a 6.02pc capitalisation rate).
“During the year, the fund successfully secured new long-term lease deals with major fuel tenants at 15 properties, enhancing the…lease expiry profile and providing securityholders with a stronger level of income security with 92pc of the rental income expiring in FY30 and beyond,” Mr Brockett added.
Nearly 90pc of its leases provide for a fixed annual rent increase of 2.75pc or more.
The trust’s debt capacity also increased $90m (to $255m), in part because it introduced a new financier.
“Additionally, the fund completed $50m in interest rate hedge transactions, resulting in a lower fixed interest rate and a longer hedge maturity profile,” Mr Crockett said.
“The equity raising and our recent capital management initiatives have supported the fund’s growth,” he added.
The trust was listed in 2017.
Its gearing in 28.2pc.
In May, Dexus made a successful $320m bid for the manager, which Mr Crockett said increased its depth of expertise and growth prospects.
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