Busy fund manager Fawkner Property has closed out its latest unlisted commercial real estate vehicle after acquiring a national portfolio of 29 fuel and convenience outlets, both city and regional, for $141.8 million from their ASX-listed owner, Waypoint REIT.
The off-market deal was struck on a healthy 6.03 per cent capitalisation rate, akin to an investment yield, with an average lease expiry of beyond nine years. All of the service stations, branded with Shell Coles Express, have fixed 3 per cent rental increases, boosting the potential return for their new owner.
The Shell Coles Express Ballarat is part of the 29-asset portfolio.
Investors looking for secure returns have pushed prices higher over the past two years for well-leased convenience and small retail assets, with the yields on some fuel outlets sold at auction falling below 5 per cent.
It is the second major transaction Melbourne-based Fawkner has struck with Waypoint in recent months, after acquiring a 31-asset portfolio of outlets for $113.9 million last year.
The deal will help Fawkner close out the latest in its series of essential services-based unlisted funds, which typically include a number of small convenience outlets grouped in a portfolio with a larger mall.
To be known as Essential Services Trust No. 20, the $300 million fund is anchored by a shopping centre in Cairns, which Fawkner acquired for $146 million from Stockland in November last year.
The latest petrol station portfolio ranges across NSW, Victoria, Queensland, South Australia, Western Australia and the Northern Territory. In all, the sites cover more than 100,000 square metres.
The deal brings Fawkner’s overall portfolio of roadside retail, convenience retail and childcare assets to nearly $800 million across 127 sites. The national portfolio has an average lease expiry of 10 years.
On the sell side is Waypoint REIT, which was previously better known as Viva Energy REIT. The property trust changed its name two years ago after its management was internalised following the sell-down by fuels supplier Viva Energy of its entire 35.5 per cent stake.
The deal with Fawkner is still subject to rights of first refusal from both Viva Energy Australia and Coles Group over the next month. If the transaction goes ahead as expected, it will be settled by June 30.
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