Charter Hall, GIC take $682m stake in Ampol property trust

The petrol station and fuel supplier formerly listed as Caltex will put 203 freehold convenience retail sites into an unlisted property trust, and has brought two major investors on board to own a 49 per cent interest.

Charter Hall Group (ASX:CHC) and Singapore's sovereign wealth fund GIC will acquire their stake in Ampol's (ASX: ALD) trust for $682 million, reflecting a weighted average capitalisation rate of 5.5 per cent and valuing the entire property trust at $1.4 billion.

Starting in 2020, Caltex has been transitioning back to the Ampol (Australian Motorists Petrol Company) name through a rebranding process that is expected to take three years.

Ampol initially intends to use the proceeds to reduce debt given the uncertainty around COVID-19, but it intends to use the trust as a platform to potentially acquire future sites and will sell additional Ampol sites into it over time.

The property trust is expected to receive around $77 million in rental payments from Ampol in the first year, and all sites will be leased back to the company under long-term triple net lease arrangements.

Ampol managing director and CEO Matt Halliday says the transaction represents compelling value in volatile market conditions.

"Following the completion of our retail network review in 2019, we identified the opportunity to unlock the value of our high-quality retail property assets through a transaction that would demonstrate value, whilst importantly allowing Ampol to retain strategic and operational control over our core Convenience Retail network," says Halliday.

"Today's announcement was made possible by the significant amount of work undertaken over the past year and represents the successful execution of the strategy communicated to the market in late 2019."

Charter Hall Group (ASX: CHC) will own 5 per cent or $34 million of the Charter Hall partnership, or a look through interest of 2.45 per cent in the Ampol portfolio.

"This off market transaction follows regular dialogue with the Ampol team over the past two years and reinforces our confidence in the convenience retail sector," says Charter Hall Group CEO David Harrison.

"The extension of our 15-year relationship with GIC further grows the breadth of this multi- sector relationship and reflects our strong market position and continued conviction for Long WALE assets with strong underlying investment fundamentals."

Matt Halliday's predecessor Julian Segal, while heading up Caltex Australia prior to his departure in March, highlighted a great opportunity for the company to bring back Ampol as an iconic brand that is still trusted by Australians.

The Australian Motorists Petrol Company was founded in 1936, and was the group's brand name until the merger with Caltex in 1995.

"Our market research confirmed that Ampol continues to be regarded as a trusted brand by Australian consumers even those who weren't born when the brand was retired," Segal said.

"Our decision to bring Ampol back reflects the focus we still have today on our heritage of friendly and efficient service, high-quality Australian-made products and being part of the local community.

"Transitioning to an Australian-owned brand will give us the freedom and independence to evolve here in Australia. Everything else about our business remains the same - including the development and delivery of high-quality premium fuels to all of our customers."

Business News Australia