Aventus Group (ASX: AVN) is a Real Estate Investment Trust (REIT) that specialises in Large Format Retail (LFR). Traditionally these have been referred to as bulky goods retail which requires large spaces for demonstrating, viewing and purchasing.
When Aventus listed on the ASX in 2015 it had 14 sites. This has grown to an impressive portfolio of 20 locations across the Australian eastern seaboard.
So why did I buy Aventus shares?
Portfolio Expansion
By the nature of the business, REITs are not expected to produce double-digit growth patterns, Aventus’ occupancy rates are already high and you can only lift rents so much before tenants start looking for the nearest exit.
However, their current customer base is high-quality producing a dependable income stream. Many tenants operate under a long-term lease with either fixed-rate or CPI rent increases.
Also, Aventus operates in a very fragmented industry so any further consolidation will only benefit the larger players.
Skin In The Game
A key component of my investment thesis is a rock-solid management team that is aligned to its shareholders – Aventus has this in spades.
Most of the directors have meaningful shareholdings, but the most prominent is company founder Brett Blundy who at time of writing holds around 29% of the trust. Brett also brings significant retail experience as he was the founder of Sanity Entertainment and Bras N things and is a part-owner of BridgeClimb Sydney.
Risks
Aventus operate in an incredibly difficult retail environment, bulky goods are not essential and can be pushed aside when household budgets are tight. Any difficulties faced by key customers can potentially hinder their ability to handle rental increases.
Also, a large portion of their customers (both tenants and end users) are exposed to the Australian residential property market, so any downturn will have a flow-on impact on consumer spending.
Conclusion
Aventus offers a high yielding income stream that complements my growth shares. Between the world-class clients and excellent management team, I am bullish on the growth plans of this company.
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Disclosure: At the time of writing, Anthony owns shares of Aventus.
