The APN Convenience Retail REIT has agreed to acquire a portfolio of six Fuel & Convenience properties in South Australia on a sale and leaseback with OTR, collectively for $35.5 million which represents an average purchase yield of 5.90%.
The properties, which are located in Naracoorte, Gepps Cross, Glenunga, Kapunda, West Beach and Murray Bridge Eastside, have brand new 20 year leases with fixed annual rent reviews of 2.75%.
OTR, which is wholly owned by Peregrine Corporation, is an iconic South Australian brand that has expanded to approximately 170 integrated retail and fuel offering sites across South Australia, Western Australia, Victoria and New South Wales, and is continuing to grow nationally. Peregrine Corporation was established in 1984 and is the 9th largest private company in Australia.
OTR and its related entities have franchise rights to a number of retail businesses including, Wokinabox, Oporto, SA Lotteries, Hungry Jacks, Subway, Krispy Kreme and Guzman Y Gomez, as well as a number of their own successful retail brands which feature throughout their network.
AQR Fund Manager, Chris Brockett said: “We are very pleased with the acquisition of this portfolio. OTR is an experienced and strong performing convenience retail operator which brings together a number of retail brands and unique retailing skills into a successful, innovative, multi-branded convenience offer, with a proven track record of growth, profitability and scalability. It is great to introduce another high quality tenant in OTR to the Fund’s tenancy mix, which will represent approximately 5% of the Fund’s total rental income on completion.
The new 20 year leases with fixed annual rent escalations of 2.75% provides investors with a high level of income security and sustainable income growth.
These acquisitions demonstrate that we continue to successfully execute on our growth strategy having committed to over $176 million of acquisitions to date in FY21 which have extended the portfolio WALE and enhanced geographic and tenant diversification.”
Following settlement of this portfolio, which is expected to occur before the end of June 2021, AQR’s portfolio will comprise 103 properties valued at $655 million (based on current reported carrying values and including the acquisitions announced on 11 May 2021), reflecting a weighted average capitalisation rate of 6.1% and a portfolio WALE of 12.2 years.
The OTR portfolio acquisition will be funded by debt, taking AQR’s gearing to 35.5% on a pro forma basis adjusted for committed acquisitions and the development pipeline, within with the Fund’s 25% – 40% target range.
There is no change to the previously advised FY2021 FFO and distribution guidance of 21.8 to 22.0 cents per security.
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