Ampol Announces Agreement for a Charter Hall and Gic Consortium to Acquire a 49% Interest in 203 Core Freehold Convenience Retail Sites

Source Company Press Release
Company Ampol Limited, Charter Hall Group, GIC Private Limited
Tags Country: Australia, Downstream: Refining, M&A: Corporate Deal, Deals
Date August 17, 2020

Ampol Limited (Ampol) (ASX:ALD) today announces the establishment of an unlisted property trust that will own 203 core freehold Convenience Retail sites. The property trust will receive approximately $77 million in rental payments from Ampol in the first year (on a 100% basis).

As part of the transaction, a Charter Hall and GIC consortium will acquire a 49% minority interest in the property trust for $682 million, reflecting a weighted average capitalisation rate of 5.5% and valuing the entire property trust at $1.4 billion.

Matt Halliday, Ampol’s Managing Director and CEO said “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.

“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. The transaction represents compelling value in volatile market conditions.”

Transaction Overview

Upon completion of the transaction, Ampol will hold a 51% controlling interest in the property trust and maintain strategic and operational control of the core Convenience Retail sites. All sites held within the property trust will be leased back to Ampol under long-term triple net lease arrangements. The leases will have a weighted average lease expiry of 19.2 years, with multiple options for lease extensions at Ampol’s election.

The property trust will hold 203 core freehold Convenience Retail sites and Ampol will continue to progress opportunities to unlock value from additional freehold sites as market conditions improve.

The property trust will provide Ampol a platform to potentially acquire future sites and sell additional Ampol sites into the property trust over time. The property trust will also provide capex for site development and upgrades that meet relevant parameters.

The property trust is intended to remain ungeared and is expected to be consolidated for accounting and ratings purposes.

The transaction is expected to complete by the end of 2020, subject to a number of conditions precedent being satisfied.

Use of Proceeds

Ampol expects to receive net proceeds of approximately $612 million after taxes, stamp duty and other costs. Given current uncertainty around COVID-19, the proceeds will be used initially to reduce leverage in line with Ampol’s Capital Allocation Framework.

Key Transaction Details

  Number of sites  203 
  Interest divested  49% 
  Sale price  $682 million 
  Inferred portfolio valuation  $1.4 billion (on a 100% basis) 
  Portfolio capitalisation rate  5.5% 
  Net proceeds after taxes, stamp duty and  $612 million 
  other costs   
  Initial rent  $77 million (on a 100% basis) 
  Annual rent escalation  CPI (2% floor, 5% cap) 
  Site development and upgrade capex  Property trust may fund capex that meets relevant parameters, with rental increases to reflect any such capex 
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