Caltex backs away from full petrol station land sale
Caltex is testing the waters with a potential sale of up to a quarter of its petrol station land, valued at $500 million, after backing away from a full sale and leaseback of its real estate.
It comes after a review into its convience retail real estate conclucded that a total sale and leaseback process was “not financially compelling” as the sale would be offset by the costs of leasing.
Caltex is now considering a sale and leaseback of up to a quarter of its $2 billion in petrol station real estate via a long-term partnership.
“Caltex is now exploring with appropriately experienced partners, a potential strategic real estate partnership,” the company said.
“These discussions include consideration of the sale of a material part (15 to 25 per cent) of the existing freehold site portfolio - currently estimated to have a total value of approximately $2 billion - with Caltex retaining between 25 to 50 per cent equity interest.
“This will enable Caltex to benefit from market value and development gains, and allows evaluation of the benefits of the partnership structure, with a view to further monetisation where value can be demonstrated.”
However, the company noted that this did not include its fuels and infrastructure assets.
Caltex sees its strongest first half in six years, as profit jumped almost 50 per cent, but this was not enough to stop dividends falling.
The fuel retailer saw its bet profit shoot up 45 per cent year on year, from $265 million in the first half of 2017 to $383 million in 2018.
Revenues climbed by 33 per cent from $7.6 billion to $10.2 billion thanks to a slight increase in sales volumes but mainly due to the average oil price increasing by more than third from $US52 a barrel in 2017 to $US71 a barrel for the first half of 2018.
However, total expenses also increased by 36 per cent, and the Australian dollar performed weakly, offsetting some of these gains.
Caltex also recorded a major win as it retained its long-term partnership with Woolworths. The petrol company will continue to supply fuel to the major retailer, beating off an attempt by BP to wrest control away from Caltex.
“We have begun our work with Woolworths to co-create a market-leading convenience offering with compelling customer loyalty and redemption arrangements. The long-term wholesale grocery supply agreement allows us to concentrate on the store offering while completing the transition process,” Caltex chief executive Julian Segal said.
Despite this strong performance, Caltex has slightly reduced its dividend year on year. It will pay out a fully franked interim dividend of 57 cents, payable on 5 October.
This is down two cents from the 60 cents dividend seen in the first half of 2017.
Caltex closed Monday trading at a share price of $33.30.