REIT in $75m service station, convenience store spree

BEN WILMOT
OCTOBER 14, 2019

The Australian

Listed property investors have endorsed the mantra of “convenience retail” that is being hailed as one path for the under-pressure industry.

The APN Convenience Retail REIT on Friday unveiled a deal that will see it snap up 13 service stations and convenience retail properties across four states for $74.6m.

Buying the 11 service stations, which are either brand new or still being built, as well as two more that have longer trading records, shows petrol stations still have a future despite the emergence of electric cars.

It also points to the value of the properties that are turning from fast-food style outlets to more up-market offerings like David Jones cuisine, with that chain striking a deal with BP.

The fund snappily raised $38m and could raise another $5m via a security purchase plan. The move was a departure from the run of raisings by office and industrial landlords, showing that resilient retail assets are still in favour.

Fund manager Chris Brockett said the acquisitions gave the listed trust an outstanding opportunity to acquire a portfolio of newly built and well-located assets.

The purchases also meant the APN-run vehicle had chains including Liberty and BP under its wing, adding to existing tenants like Mobil and 7-Eleven.

But most critical for investors is the promise of steady yields in the face of ever lower interest rates and returns on rival asset classes.

The week also saw private players buy major traditional shopping centres in Sydney in deals worth close to $250m as they backed their skills in running and turning malls around.

While discount department stores are expected to shrink further, major supermarket players have already slowed the growth of their networks as they chase profitability.

Buyers with deep experience in the retail industry, including “Mean Machine” swimmer turned fund manager Mark Stockwell and tycoon Stan Perron, have also bought major traditional shopping centre assets this year.

Other buyers include funds groups Haben and Newmark Capital, where the principals also pour their own capital into overhauling centres they are buying from listed trusts.