Melbourne-based APN Property Group has called in top-tier investment banks UBS and Bank of America Merrill Lynch to handle the float of a $350 million petrol station fund on the Australian ­Securities Exchange.

The fund manager, led by chief executive Tim Slattery, is seeking to tap the wave of investors chasing higher-yielding listed stocks that display strong defensive characteristics, and the offer will help the group expand its $2.4 billion funds empire.

The move also capitalises on the emergence of petrol station properties as a mainstream asset class, with the Viva Energy REIT floating last year, and more portfolios in private hands likely to be consolidated in coming years.

APN has struck up the partnership with Puma Energy and is building on a $106m portfolio of petrol stations it acquired for an unlisted venture last year.

This fund will be listed along with about $80m worth of assets to be drawn from the unlisted APN Property Plus Portfolio, as well as additional Puma-branded petrol stations the manager is assembling.

Puma’s Energy’s parent group is an oil supplier across five continents and had global sales of over $US12.7bn ($16.75bn) last year.

In Australia, Puma Energy operates or supplies over 240 retail sites and 22 depots.

APN’s raising for the unlisted vehicle won backing from wealthy individuals and institutions expecting an uplift as the portfolio of 23 Puma petrol stations in Queensland and NSW.

APN quickly garnered equity commitments of about $70m to back the launch of this fund, which was forecast to provide a starting equity distribution yield of 7.4 per cent annually, based on gearing of about 42 per cent. Listed investors are also clamouring for higher-yielding properties and the fund could generate a distribution yield of between 6.75 per cent and 7.25 per cent, depending on investor demand and the portfolio’s final metrics.

The two investment banks have been selected on their respective expertise with UBS handling seven A-REIT floats since the global financial crisis and BAML working as one of the advisers on the successful Viva Energy REIT.

APN is likely to maintain a significant stake in the trust once it is listed, in keeping with its practice of holding a substantial interest in its listed Industria REIT.

Puma will also likely be a cornerstone investor in the fund.

Individual petrol stations have sold on yields in the low 5 per cent range and the Puma portfolio is seen as more attractively priced.

It carries a long-weighted average lease expiry of about 13 years and has keenly sought double and triple net lease structures.

Fund managers are chasing new product in the A-REIT space after a bout of consolidation in the sector and the petrol stations are being viewed as akin to convenience retail assets, which are considered well-placed in the face of structural changes in the area.

Once listed, the trust will likely serve as an expansionary vehicle as it is positioned as Puma’s preferred capital partner as the chain seeks to further expand its network, with the focus on Victoria and NSW.

APN has appointed property veteran Chris Brockett as the fund manager for the current unlisted fund and he will be at the helm of the vehicle as it heads towards a listing.

The $1.5bn Viva Energy REIT, which owns assets leased to Shell/Coles Express, surged on debut last August and lifted again after reporting an interim operating profit ahead of forecasts.

Extracted from The Australian.

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