APN Convenience Retail REIT is set acquire 3 service station and convenience retail properties and is in exclusive due diligence on a
further 9 assets for $75.3 million.
The assets are supported by long leases to high quality tenants with a weighted average lease expiry (WALE) of 16.4 years and fixed annual rental increases of 2.9%. Settlement of the portfolio assets are expected to occur between January 2021 and May 2021.
The acquisitions (excluding transaction costs) reflect a 6.1% initial yield.
To fund the acquisitions, APN is undertaking a fully underwritten institutional placement to raise approximately $30 million at an issue price of $3.55 per new stapled security. The remaining funds will be drawn from existing and new debt facilities.
The New Securities to be issued under the Placement will be issued at a fixed price of $3.55 per New Security, which represents a:
▪ 2.7% discount to the last closing price of $3.65; and
▪ 2.9% discount to the 5-day VWAP of $3.66,
(both as at 7 December 2020).
Commenting on the Acquisitions, Chris Brockett, AQR Fund Manager, said: “The Acquisitions provide AQR with an outstanding opportunity to acquire a balanced portfolio of established operating sites and newly built assets which enhances AQR’s overall portfolio scale and lease expiry profile.”
“The Acquisitions provide the opportunity to enter into locations currently under-represented within the portfolio and further improve geographic and tenant diversification.”
“Importantly, the Acquisitions are underpinned by long-term leases with contracted annual rental increases of 2.9% across the Acquisitions, providing investors with secure and sustainable income growth.”
“These acquisitions are a great result of our active approach to building relationships with developers to achieve beneficial outcomes for all parties and the future growth pipeline for the Fund.”
Including the impact of the acquisitions and capital raising and subject to market conditions and no unforeseen events, the Fund reaffirms FY21 previous guidance previously with Funds from operations (“FFO”) and distributions per security (“DPS”) expected to be 21.8 – 22.0 cents per
security, reflecting a 6.2% yield on the placement issue price.