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