Australian Unity sells investment-grade Melbourne industrial asset after two years

Manfreight Distribution pays annual rent of $1,001,100 for the Springvale property.

Another investment grade industrial asset is selling in Melbourne.

The three hectare site at 1651-1657 Centre Road, Springvale, returns just over $1 million in annual rent from sole tenant Manfreight Distribution Pty Ltd.

Though a sale price has not yet been disclosed, assets of this type have been trading on yields of around 7 per cent this year. On that assumption, this property could be speculated to be worth around $14 million.

The property last made headlines in 2016 when it sold to Australian Unity for $12.98 million, a deal which reflected a 7.3 per cent yield (at that time, the tenant paid annual rent of $948,000). In a fund update published to June 30, 2018, Australian Unity attached a book value of $13.25 million to it, following an October, 2017, appraisal. This valuation noted a lease expiring in 2020.

About 23 kilometres south-east of the city, 1651-1657 Centre Road was marketed this time around by CBRE’s Rory Hilton and Ben Hegerty via an expressions of interest campaign which closed in June, 2018.

An 11,008 square metre “high quality” industrial warehouse occupies 37 per cent of the holding.

The property was promoted as being a “land bank opportunity” in a “premium infill location” with “high underlying value” – all of which suggests that something bigger and potentially earning a better return, could be developed on it, longer-term.

Alternatively, parts of the site currently used as car and truck parking, could make way for more buildings down the track.

Near the corner of Westall Road – and an extension mooted for this road from the Princes Highway -the Manfreight Distribution property has 194 metres of frontage to Centre Road.

Last month, a 4.3 hectare block of industrial zoned land in nearby Springvale traded to a developer for a price speculated to be about $11 million. At 1626-1638 Centre Road, this offering was marketed permit-ready for an industrial park containing 36 office warehouses ranging in size from 92 square metres to 518 sqm.

In Scoresby, which is about 29 kilometres south-east of the city, Ascendas REIT recently paid $16.2 million for a vacant factory built in 1979 for homewares manufacture Décor.

In Dandenong South, a couple of kilometres further south-east of the city than Springvale and Scoresby, two investment-grade industrial properties recently sold for $31.7 million – averaging a 6.6 per cent yield.

Across town in Epping, 20 kilometres north of the Melbourne CBD, MPG Funds Management last month sold a 2.1 hectare industrial investment covering 13 Ricky Way and 10 Jersey Drive. Leased to Edlyn Foods as a manufacturing and distribution facility, this asset exchanged for $15.2 million, a 7.5 per cent return on investment for the new owner, Industria REIT.

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Marc Pallisco

A freelance property writer and experienced analyst, Marc is the co-founder of