Melbourne-based Fawkner Property platform has bought a 31-asset portfolio of fuel and convenience outlets from ASX-listed Waypoint REIT in a $113.9 million deal, taking its funds management platform past $1 billion.
The portfolio of urban and regional assets across NSW, South Australia, Victoria, Queensland, Western Australia and the Northern Territory was acquired on a capitalisation rate, similar to an investment yield, of 6.42 per cent. All the outlets are leased to listed fuels supplier Viva Energy Group.
For Fawkner, the transaction represents the latest addition to a platform that has focused on recession-resilient commercial property, held across a series of essential services-themed property trusts.
The Waypoint properties will settle in three tranches this year. The first two groups will go into Fawkner Property’s Essential Services Trust No.18, which is anchored by Perth mall The Square Mirrabooka.
Fawkner took control of The Square, once part of the real estate empire put together by billionaire Stan Perron before he died three years ago, through a $195 million deal in late June.
Fawkner Property managing director Owen Lennie said the Waypoint portfolio had an average lease expiry of 7.7 years with fixed rental escalations of at least 3 per cent. The No.18 trust’s portfolio had swollen to $325 million, with all assets acquired off-market.
“EST18 is the largest closed-ended unlisted property trust in Australia currently open to investors. The trust will pay investors a tax-effective monthly income stream at 7 per cent per annum,” Mr Lennie said.
Analysts say the deal is also a winner for Waypoint. The portfolio was sold at a 10 per cent premium to its December book value.
The divestment will trigger a capital management process of $150 million for the listed trust, with an on-market buyback of shares and a capital return to investors anticipated.
“We expect the quality of Waypoint REIT’s portfolio to improve post the divestments, with the underlying land value as a percentage of book value to increase,” Ord Minnett analysts wrote in a client note.
“We are supportive of the announced capital management initiatives, given the stock currently trades below net tangible assets and the competitive nature for assets in the current market.”
JPMorgan analysts also endorsed the benefits of the divestment, calling out the “proactive approach” the property trust had taken to managing its portfolio and “unlocking value for shareholders, and believe transaction evidence is well ahead of current equity pricing”.
Extracted from AFR