Global fuel giant BP has followed in the footsteps of rival Caltex and sold a half share of its $1.7 billion petrol station portfolio to listed property company Charter Hall.

Charter Hall’s $840 million purchase of a 49 per cent stake in 225 BP fuel outlets was part of a massive $1.25 billion pre-Christmas spending spree in which the property fund manager swooped on biscuit brand Arnott’s Sydney factory in Huntingwood, scooping it up in a $398.9 million sale-and-leaseback deal.

The BP outlets exchanged on a 5.5 per cent initial yield.

Deal making in Australia’s fuel and convenience retail sector has been particularly active this year. BP’s deal pre-empted a mooted spin-off by Caltex Australia of its petrol stations.Advertisement

Caltex, which is navigating an $8.6 billion takeover bid from Canadian convenience giant Alimentation Couche-Tard, will test investor interest early next year by floating a half stake in 250 of its service stations around Australia to form a $1.1 billion listed property trust.

In a further sign of heightened activity, the fuel retailer last week also signed a deal to sell 25 mainly inner-city, high-value petrol station sites for $136 million. The majority were snapped up by Woolworths, which took 10, and Melbourne-based development manager Oliver Hume, which purchased a dozen.

Charter Hall said it expected to wrap up the purchase of BP’s petrol stations next week in partnership with two of its ASX-listed managed funds – the Charter Hall Long WALE REIT and the Charter Hall Retail REIT.

The group’s Long WALE REIT, which will control 50 per cent of the partnership, halted trading on Thursday to tap investors for a $350 million equity raising to help fund the purchase.

“We’ve done three other raisings in the Long WALE REIT this year and all have been significantly oversubscribed, so I don’t see this as being any different,” Charter Hall managing director and chief executive David Harrison said.

Arnott’s food production and distribution facility was acquired in a 50/50 split between Charter Hall’s Prime Industrial Fund and the Long WALE REIT. The deal was struck on an initial yield of 4.5 per cent.

Arnott’s has signed a 32-year lease over the property which has bulk handling, a large oven hall, chocolate room, packing area and offices.

The group’s retail REIT will fund its 30 per cent stake in BP’s portfolio by selling assets worth $137 million, including properties in Moe, Kyneton, Bairnsdale, Cooma and Canberra’s Erindale Shopping Centre.

With more than $38 billion of funds under management and a string of acquisitions under its belt, Charter Hall upgraded its earnings guidance saying it expects 30 per cent growth in post-tax operating earnings per security rather than previous guidance of 18 to 20 per cent.

“To go from that to 30 per cent in the first six months of the year is a pretty strong upgrade,” Mr Harrison said.

Extracted from The Age