Charter Hall sells off 9 Automotive Sites to AP Eagers

13 November 2020

Eagers Automotive (previously known as AP Eagers) has finalised a deal with Charter Hall to acquire its ninth property from the Fund Manager within two months.

The properties were held across two of Charter Hall’s closed ended Direct Automotive Funds, which Charter Hall have decided to close 12 months ahead of schedule.

The Funds were provide investors with the forecast 7.5%pa distribution yield up until April 2020, however COVID-19 had an impact on the Eagers ability to pay rent following a decline in sales.

Despite AP Eagers being cashed up from other sources, Charter Hall were effectively forced to defer 50% of the gross rent payable from 1 April 2020 to 30 June 2020 to be repayable from 1 October 2020 to 31 December 2021, in line with the leasing Code.

The decline in rent resulted in the yield dropping to approx 6.0% for DAF 1 and 6.3% for DAF2.

The two Automotive funds were due to terminate in 2022, however Charter Hall elected to sell the assets to the tenant at prices in line with recent valuations and wind up the trust 12 months ahead of time.

Eagers held first and last rights to acquire the assets off Charter Hall and as such the 9 sites were not offered to the market.

The nine properties included;

  • Zupps, Mt Gravatt, QLD (five properties)
  • Big Rock Toyota, Balcotta, WA
  • South Morang Toyota, VIC
  • Sutherland Mazda, Kirrawee, NSW
  • Toyota Castle Hill, NSW

The 9,919sqm Sutherland Mazda site at 26 Waratah St Kirrawee was sold for $29.5m (in line with the independent valuation obtained at 30 June 2020) and settled on October 30. Charter Hall paid $24.3m for the asset in 2015.

The Castle Hill property has been exchanged for $76.25 million and is due to settle in January 2021. The 4.3ha site consists of three dealerships for Nissan, Holden and Hyundai, each with a showroom, office, service centre and external display area. The property has a gross lettable area of 12,419sqm, supported by a remaining 12 year lease and fixed rental increases of 4.0% p.a. Charter Hall initially acquired the asset for $65.5m.

The sale of the 9 assets, leaves 2 remaining Automotive assets in the Charter Halls Funds;

  • a Mazda dealership at 18-28 Anzac Avenue, Hillcrest QLD which is earmarked for sale in early 2021.
  • a Subaru dealership at 375-377 Hume Highway, Liverpool which will hit the market in December 2020.