APN Convenience Retail REIT (ASX:AQR) Eyes $35 Million Capital Raising

Summary

  • APN Convenience Retail REIT is seeking around $35 million to fund acquisitions, repay debt and support business activities. 
  • The acquisitions provide better geographic and tenant diversification coupled with long-term income growth. 

APN Convenience Retail REIT (ASX:AQR) is acquiring three service station and convenience retail properties. The fund is also conducting exclusive due diligence on nine assets in New South Wales, South Australia, Western Australia, and Queensland. 

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It would pay a total consideration of $75.3 million for the 12 assets, excluding transaction costs. The acquisitions reflect an initial yield of 6.1%. 

The properties are on long leases to high-quality tenants with a weighted average lease expiry (WALE) of 16.4 years. 

Related: APN Funds Management Confirms Property Acquisitions

The proposed acquisitions have fixed annual rent increases of 2.9% to support long-term income growth. The transactions are expected to get settled between January 2021 and May 2021.

The convenience REIT intends to fund the transactions through a combination of debt and equity. It is raising around $30 million through a fully underwritten placement. 

New securities would be issued at a price of $3.55 per security. The remaining consideration would be paid through existing and new debt facilities. 

AQR is also undertaking a security purchase plan (non-underwritten), which would raise a maximum of $5 million. The capital from the security purchase plan would be used to repay debt and support business activities. 

New securities under the security purchase plan would be issued at the $3.55 per security less AQR’s December 2020 distribution, which is expected around 5.475 cents per security. 

The acquisition of 12 properties would provide an improved tenant and enhanced geographic diversification. It provides a balanced portfolio of established operating sites and newly built assets, providing better lease expiry profile and portfolio scale. 

The acquisitions and the placement would be accretive to funds from operations (FFO) and distribution per security (DPS) in FY22. 

AQR has also reaffirmed FY21 guidance, subject to market conditions. It is expecting FFO and DPS of 21.8 cents to 22 cents per security, indicating a 6.2% yield on the placement issue price. 

AQR securities were placed on a trading half before the announcements.

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