Billions of dollars worth of Australian petrol stations and industrial parks are headed for sharemarket floats in Australia and Singapore as a tide of capital chases real estate assets that provide investors with healthy yields in a low-return world.
Local investors are gearing up for the launch of a roadshow by gas giant Viva Energy, which plans to list a property fund holding about $2 billion of service stations.
Supermarket giant Coles yesterday dropped legal action that could have delayed the launch of one of the largest Australian real estate investment trust floats in years.
Viva’s non-deal roadshow will showcase the 425-service station portfolio, with investors clamouring for stakes in the $1.3bn vehicle being marketed by Deutsche Bank and Bank of America Merrill Lynch.
The group is not alone, with Victoria-based petrol retailer United Petroleum also dusting off plans to float as a $1bn company.
Folkestone Maxim Asset Management managing director Winston Sammut said there was plenty of money around for new floats but cautioned the A-REIT sector was trading at levels that were “a bit toppy”.
“If it doesn’t have a good story, good assets and sound fundamentals, I think it’s going to be difficult,” he said.
Viva is seeking to appeal to traditional property investors, as well as superannuation funds, which are now priced out of the direct market by aggressive foreign buying.
The float is being pitched as providing exposure to a growing empire of Coles-branded petrol stations that carry long-term leases, but investors are demanding certainty around the covenant that is offered.
Viva is offering a yield of 6-6.5 per cent and sees opportunities to expand in the fragmented petrol station industry.
Coles offshoot Eureka Operations yesterday came out backing Viva’s float plans, burying the hatchet after Viva won two court cases over its right to deal with the petrol stations.
“We are excited about ongoing network growth, which will see our two organisations working together with a view to opening more than 100 Alliance sites over the next five years,” a Coles spokesman said.
“Eureka fully supports Viva Energy in establishing an A-REIT. If an A-REIT proceeds, it will provide a strong platform to support the further expansion of the retail network,” the spokesman said.
Viva said it was also focused on opening more petrol stations after adding more than 30 sites this year. “If an A-REIT proceeds, it will provide a strong platform to support the further expansion of the retail network,” a Viva spokeswoman said.
Industrial property floats are also running hot. Funds manager Propertylink is visiting investors ahead of its planned float as a $900 million vehicle, mainly owning industrial parks, and is being pitched as a growth stock as it can expand its $2bn funds empire.
In Singapore, Thai billionaire Charoen Sirivadhanabhakdi was yesterday finalising a $S900m ($902m) raising to list a $1.58bn portfolio of Australian industrial and logistics properties.
The billionaire’s Singapore-based real estate firm, Frasers Centrepoint, took over Australand in 2014 and will spin 51 properties out of that company into the Singapore-listed Frasers Logistics & Industrial Trust.
It is offering to pay a yield of between 6.83 per cent and 7 per cent this year, and 7.3-7.5 per cent in 2017.
Extracted in full from The Australian.