The listed petrol station fund run by APN Property completed a steady run of acquisitions during the 2021 first-half in the midst of the pandemic disruption, boosting earnings and allowing it to reaffirm increased guidance for the full year.
APN Property Convenience Retail REIT’s Funds from operations – the preferred earnings measure in the sector because it removes the volatility of portfolio revaluations – rose 36.7 per cent to $12.3 million over the interim period.
That surge was driven by a 24.4 per cent increase in net property income, based on rental growth along with the contribution from the fund’s acquisitions and completed development projects.
On a per security basis, FFO rose a more modest 0.4 per cent to 10.8¢, the result of additional securities the fund issued as it raised capital for its buying program.
In all, the fund, led by Chris Brockett, put together $81.9 million in acquisitions over the first half. Another $44.5 million of deals are in the pipeline, with the petrol station fund conducting due diligence.
“These transactions have contributed to extending the portfolio WALE [weighted average lease expiry], improving geographic diversification and strengthening the quality and diversification of tenants,” Mr Brockett said.
“They also demonstrate that we continue to be active in sourcing and executing on new investment opportunities.”
Statutory profit rose 8.1 per cent to $21 million. The APN Property-run fund has reaffirmed its FFO and distribution guidance of 21.8¢ to 22.0¢ per security. By contrast, its full-year 2020 FFO was 21.6¢ and distributions totalled 21.8¢.
Since listing midway through 2017, the fund has more than doubled the value of its portfolio of petrol stations, which now numbers 88 assets. Its biggest tenant is Puma Energy.
The fund’s interim earnings presentation noted how investor demand for petrol stations as defensive assets increased last year. Along with direct fuel sales at the bowser, the retail side of petrol stations brings a high exposure to non-discretionary spending.
The volume of petrol stations traded rose last year and average sale yields tightened to 5.75 per cent from 6.12 per cent a year earlier, a sign of rising prices.
The tightening in cap rates – akin to an investment yield – along with annual rent increases led to an $11.1 million revaluation upwards of the portfolio to $525 million, a gain of more than 2.5 per cent.