The unlisted APN National Storage Property Trust will sell its $346 million portfolio by November to avoid an expensive refinancing that might have slashed distributions by up to 24 per cent.
Fund manager APN Property Group said the trust “had not been immune” to volatile credit markets and it was close to selling six self storage properties to tenant National Storage for $40 million.
APN director Howard Benchley said after a meeting that approved the sale strategy that the alternative had been listed on the Australian Securities Exchange, but “that didn’t look like a good option”. “What we have said to the unit holders is that it’s hard to assess what these assets will sell for in the market, but I stated at the meeting that we would not be selling [the entire portfolio] unless it was sold at a premium price.”
If the portfolio is sold, unit holders will receive total returns close to 12 per cent a year. APN had warned that if it had to refinance the portfolio, trust distributions might fall 9.5c per unit to as low as 7c and might fall even more if interest rates or bank debt margins rose.
The trust has eight debt facilities with Suncorp Metway totalling about $227.5 million. A Suncorp spokeswoman said it had been in discussions with APN about the expiry of debt facilities in November and trust’s future financing needs.
“We had, and still hold, every intention of continuing to provide ongoing facilities from November if APN Funds Management considered refinancing to be in the interests of the property trust unit holders,” the spokeswoman said.
Observers said the APN trust’s business model had difficulties as its partnership with National Storage had cooled. A private Queensland developer mulled a play for the trust assets last year but that deal fell victim to the credit crunch.
National Storage has more than 60 properties nationwide and analysis said it was likely to seek a new property partner.
