fuel station hungry jacks otr apn convenience retail
The acquisition is of six properties in South Australia, currently on leaseback with OTR. Image – OTR.
  • Deal worth $35.5M with average purchase yield 5.90%
  • Follows $59M Queensland acquisitions last week
  • Total portfolio now 103 properties worth circa $655 million

Last week, APN Convenience Retail REIT (ASX: AQR) spent big, the portfolio grew by six properties, all across the sunshine state.

The $59 million dollar purchase was followed by news the responsible entity, APN Property Group (ASX: APN), received an acquisition offer from Dexus.

Today

As the markets entered the last day of trading for the week, AQR announced it made six more acquisitions, this time in South Australia.

This acquisition came in at a lower total cost, $35.5 million, with a higher average purchase yield than the Queensland acquisitions last week, coming in at 5.90% as compared to 5.50%.

The six properties are on a sale and leaseback with fuel station and convenience retail company OTR, a company that has “franchise rights to a number of retail businesses including, Wokinabox, Oporto, SA Lotteries, Hungry Jacks, Subway, Krispy Kreme and Guzman Y Gomez,”.

Located in Naracoorte, Gepps Cross, Glenunga, Kapunda, West Beach and Murray Bridge Eastside, AQR said the properties “have brand new 20 year leases with fixed annual rent reviews of 2.75%.”

“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 the Fund’s 25% -40% target range.”

Portfolio effects

AQR fund manager, Chris Brockett said the company is pleased with the acquisition, and:

“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.”

Chris Brockett, AQR Fund Manager

“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.”

APN Convenience Retail REIT has “committed to over $176 million of acquisitions to date in FY21 which [has] extended the portfolio WALE and enhanced geographic and tenant diversification.”

Settlement for the six new SA properties is expected before the end of June, by which time the portfolio will comprise 103 properties worth circa $655 million.

AQR said this “[reflects] a weighted average capitalisation rate of 6.1% and a portfolio WALE of 12.2 years.”

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