The petrol tank’s full, the engine is running and the tyres have hit the tarmac – again.

With Canada’s Couche-Tard gone (but definitely not forgotten), Caltex and its bankers have turned their attention once again to finding a passive investor for a stake in the group’s petrol station properties.

It is understood Caltex and UBS went back to the interested parties this week and asked them to reconfirm their interest, before a more formal auction.

They were told that up for grabs, once again, is a 49 per cent stake in 250 petrol station sites owned and run by Caltex. It plans to retain the other 51 per cent and write long-term leases against the property portfolio.

There was also an accompanying update, in line with what Caltex told its shareholders last month. Yes, fuel sales are down, but retail fuel margins have improved and shop sales and margins are tracking similar to last year.

In terms of interested parties, there are a couple of obvious places to start the sale.

Charter Hall and APN Property Group both own petrol stations in their listed REIT offshoots – and both have access to investor capital should they wish to strike again. It is understood they were both interested when Caltex set off to pursue a property transaction late last year and are expected to line up again.

Charter Hall, in particular, has a big appetite, that does not seem to have been affected by COVID-19 to date. The property investor snapped up $840 million worth of BP fuel and convenience retail properties late last year, a 49 per cent stake in the BP portfolio.

It followed that up in February this year by nabbing a 10 per cent stake in Viva Energy REIT – soon to be renamed Waypoint REIT, subject to a vote at its AGM – after a sell-down by Viva Energy. Viva Energy REIT itself is another potential buyer.

The question is whether Caltex and its bankers can lure some outsiders into the sale and turn it into a hard-fought auction.

One idea – and it is from left field – is the struggling pub REITs. Would the big players such as ALE Property Group and Hotel Property Investments be up for a diversification play? It is understood they have thought about it in the past.

Of course, the big wild card for this sale – and all auctions at the moment – is COVID-19 and how to structure the process to comply with social distancing restrictions, travel bans and the like.

It is understood Caltex and its bankers told the tyre-kickers they would take things slowly and not rush would-be buyers into quick-fire binding bid dates and the like.

The mooted sale represents back to business as usual for Caltex, after taking suitor Couche-Tard through a full round of due diligence. The property sell-down was initially announced as an IPO back in November, turned into a dual-track as some interest emerged and now shapes as a portfolio sale.

Choppy equity market conditions mean it’s not an ideal time to take anything public – even something you would expect to be a pretty stable collection of properties with long-life leases back to BBB-rated Caltex.

The Caltex deal also comes as UBS’ real estate team navigates the sale of Qube Holdings’ Moorebank Logistics Park and associated assets. 

Extracted from AFR