Industrial assets collect $351m from Centuria

The Port Melbourne property is selling on a 3.7 per cent yield.

Centuria has snapped up eight fully leased warehouses, boosting the value of its Industrial REIT (CIP) by 10 per cent.

Lendlease acquired an Eastern Creek warehouse on a 3.62 per cent yield in May.

In the biggest deal, the manager is spending $200.2 million – a price reflecting a benchmark 3.6pc return – for a Fairfield East asset (pictured, top) leased to DB Schenker and Fantastic Furniture.

The vendor, Dexus-managed AMP Capital Diversified Property Fund, paid $96.54m in 2016.

Three years prior to that, the west Sydney property, 56-88 Lisbon Street, traded for $65m.

On 8.36 hectares, with 60,233 square metres of area, the investment is one of 10 large scale distribution centres between the M2, M5 and M7 orbital road network.

The sale, believed to reflect a record yield for a property of its type and size, comes four months since Lendlease paid AMP Capital Investors $130.1m – a 3.62pc return – for an Eastern Creek facility leased to Best & Less.

In August, Dexus paid McPhee Transport director Jay McPhee $186m for a portfolio of four new industrial assets.

The blended yield for that transaction was 3.85pc.

Colliers’ Gavin Bishop and Sean Thomson marketed 56-88 Lisbon St – the biggest standalone industrial investment to trade this year,

The smaller properties

At Wetherill Park, about seven kilometres west of Fairfield East, Centuria is paying ESR $36.8m (a four per cent return) for 164-166 Newton Road.

On 2.6ha, with 11,833 sqm of area, part occupied by ForkForce, this distribution centre previously traded for $14.9m in October, 2014.

In Welshpool, in Perth’s inner south-east, the manager is outlaying $35.1m – a 6.3pc return – for the 20,349 sqm Kewdale Industrial Estate, on 3.86ha at 48-54 Kewdale Rd.

Two of Centuria’s newest assets are in Brisbane: a 4099 sqm cold storage facility at 51 Depot St, Banyo, which is costing $20.3m on a 4.7pc yield, and a 9089 sqm Darra distribution centre, at 31 Gravel Pit Rd, for $19m, reflecting a five pc return, following a campaign from Colliers’ Simon Beirne and Levi Maxwell (story continues below).

Three in Melbourne

Three of the eight properties Centuria announced it purchased today, are in Melbourne.

The biggest, 51-65 Wharf Rd, Port Melbourne, occupied by Mercedes Benz, is setting it back $22m on a 3.7pc yield.

Developed by Salta, this asset previously sold for $7.85m in 2008.

Vinci Carbone’s Joseph Carbone brokered the latest deal with Colliers’ Jack Kelliher representing CIP.

Elsewhere in the city Centuria has acquired:

  • A 4214 sqm distribution centre at 346 Boundary Rd, Derrimut, for which it is paying $11.9m on a 5.5pc yield; and
  • 31-35 Hallam Rd South, Hallam – a 4810 sqm warehouse priced at $6.2m reflecting a 5.8pc return.

To fund the new properties, the manager will now undertake a c$300m capital raising.

“We consider the acquisitions to be under-rented as market rents have continued to grow at a rapid rate on the back of accelerated tenant demand, driven by e-commerce and last mile users,” CIP manager Jesse Curtis said.

“The [blended] Weighted Average Lease Expiry of 3.8 years provides the opportunity to leverage CIP’s strong leasing capability to achieve a positive rental reversion capturing outsized rental growth being experienced with infill industrial markets,” he added.

“In addition, a number of the sites have value add potential through leasing, development or reportioning, adding to CIP’s value-add pipeline”.

Following settlement, CIP will hold 75 assets worth a combined $3.5 billion.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of