Charter Hall has acquired a 6.45 hectare industrial site in Melbourne’s north Epping and pre-committed Visy Logistics to a 34,777 square metre facility it will develop on it over the next four months.
The investment will be held by the $5.8 billion Charter Hall Prime Industrial Fund (CPIF) – which also owns the nearby Somerton factory the occupier will relocate from.
The tenancy agreement, with what has recently become one of the landlord’s biggest clients, is for 10 years with fixed annual 3.25 per cent rent reviews.
Visy has three five-year options.
The asset’s end-value is estimated will be about $55 million.
In the immediate vicinity, in August, LOGOS Group paid Time & Place and MaxCap c$70m for an empty new 9.4ha industrial estate with three buildings containing a total lettable area of 46,240 sqm.
The Epping property
Within Epping’s Biodiversity Business Park, the Visy factory will contain a high-clearance 33,800 sqm warehouse accessed by eight recessed loading docks and 11 at-grade roller door points.
The canopies will range between 25-35 metres.
It will also include a two level, 1059 sqm office and 208 car parks.
There will be truck parking and a staging area too, Charter Hall said.
Epping, 20 kilometres from both town and Melbourne Airport, is home to the Melbourne Wholesale Fresh Fruit, Vegetable and Flower Market.
Charter Hall and Visy will be involved for a while
In July, Charter Hall for CPIF and its Direct Industrial Fund No 4, paid c$215m for three industrial assets tenanted to Owens-Illinois Australia, which recently became a wholly owned Visy Industries subsidiary (story continues below).
Adding capital gain and the Epping property – this portfolio value balloons to $270m-plus; the blended Weighted Average Lease Expiry is 17 years.
“As one of Australia’s largest industrial and logistics owners and developers, Charter Hall was able to leverage its scale and flexibility to deliver a smart, long-term solution to Visy allowing their business to grow,” Charter Hall chief investment officer, Sean McMahon, said.
“We look forward to expanding the Visy relationship”.
Visy of location
Visy’s Group general counsel, Robert Kaye, described the replacement property as state of the art.
“The…facility will be an integral part of our supply chain, so having the right expertise and responsiveness from our partners is vital to achieving our objectives,” according to the executive.
The property is situated in the core industrial precinct of the suburb…adjacent to the Hume Freeway, he added.
Epping is 31kms from Port of Melbourne.
“The focus of activity in the northern industrial market has shifted over the years, due to the delivery of…road infrastructure, major government initiatives including relocating the Fresh Produce and Fruit Market to Epping, proximity to amenities and excellent road links between the inner and outer…markets,” Mr Kaye said.
CPIF fund manager, Richard Mason, added “the land acquisition and development is in line with the Fund’s develop to core strategy by creating our own product to hold for the long-term through partnering with key tenant customers in meeting their industrial and logistics requirements”.
With the Visy deal, the trust’s development pipeline for pre-committed projects tops $1b in value.
Its portfolio also comprises 76 investments, 95pc rented to government, publicly listed or globally recognised businesses.