APN Convenience Retail REIT (AQR) has snapped up three convenience retail centres in Queensland for $27.5 million from Brisbane based developer Denmac Nominees.
CBRE’s Michael Hedger and Joe Tynan negotiated the sale of Coles Express Acacia Ridge, Coles Express Moorooka and Coles Express Cairns at an average capitalisation rate of 6.3%.
The three sites were built between mid-2016 and the end of 2017, with over 90% of the income derived from major tenants Viva Energy Australia (representing 65% of the income), Krispy Crème (10%), global pressure wash manufacturer Karcher (9%) and Gloria Jeans (7%).
The remainder of the rent is derived from local convenience retailers, with the portfolio having an average lease expiry of 9.9 years.
AQR Fund Manager Chris Brockett said; “We couldn’t be more pleased with the portfolio acquisition of Acacia Ridge, Moorooka and Cairns. These properties are outstanding examples of well located, designed and built service station and convenience retail centres, with a great mix of national and local retailers.”
The deals boost AQR’s total portfolio size to $483 million and FY2021 acquisitions to $38 million following the CBRE negotiated acquisition of Brisbane Airport Link Service Centre in early July.
“With a strong balance sheet, we are well placed to pursue further acquisition opportunities while maintaining a prudent level of gearing,” Mr Brockett said
CBRE’s Joe Tynan said the transaction demonstrated the continued demand for fuel and convenience-based retail investments due to their annuity style income streams, which offered annual income growth and were underpinned by a long WALE and strong lease covenants.
Michael Hedger added that pricing for this style of asset was expected to be more resilient to economic challenges, underpinned by the shortage of well-located premium grade investments available in the market and the significant number of new private and institutional mandates.
The AQR assets are the latest to be developed by Denmac Nominees.
The patriarch of the family behind Denmac, Denis McEniery, operated service stations in his native Warwick before moving into the motor industry.
This investment strategy has been continued by his grandson William Griffin on behalf of the McEniery family, with a focus on repositioning existing assets and acquiring new properties.
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