Dexus has sold four major east coast investments.
In the biggest deal, the group is banking $118.5 million from Gateway Capital and Invesco’s Urban Infill Logistics joint venture, for a contemporary business park in Sydney’s St Leonards.
Offered by the Wholesale Property Fund, 12 Frederick Street, on 1.95 hectares at the corner of Reserve Road, contains 13 office and warehouse units, from 900-2050 square metres, and 357 car parks.
The asset recently underwent a repositioning – with new signage, mechanical services, sprinkler systems and façade upgrades.
Workplaces were also refurbished and amenities added ahead of a re-letting.
The Weighted Average Lease Expiry is 6.5 years.
“This is a highly attractive trophy type asset that rarely becomes available to purchase,” Gateway Capital managing director, Peter McDonald, said.
“The location is second to none being the closest industrial market to the Sydney CBD and within close proximity to major road and rail networks,” he added.
“This asset has all the attributes to capture the upper end of rental growth that is prevalent in our market,” according to the executive.
It is the third acquisition for UIL; earlier this year it also purchased properties at Revesby and, in Melbourne, at Altona.
“We expect the assets acquired…to continue to experience solid income growth driven by the strong demand coupled with Gateway Capital’s active management approach,” Gateway chief executive officer, Stuart Dawes, said.
St Leonards is three kilometres from Chatswood.
The 12 Frederick St disposal will deliver Dexus a c$50m pre-tax profit.
Dealer buys dealership again
Meanwhile in Brisbane’s Fortitude Valley, Dexus, on behalf of a single asset fund, has sold adjoining modern car dealerships to the tenant, Autosports Group Limited, for $98m.
The result for 570-586 Wickham St and 10 Light reflects a capital gain on the $91.2m it paid in 2018.
That deal was struck at a six per cent net passing yield – indicative of the significant development upside, which could include 20 level buildings.
The return on the Autosports purchase is speculated to be about the same.
Audi Centre, Euromarque buildings
The Fortitude Valley asset contains two buildings – the Audi Centre and Euromarque, which sells Bentley, Lamborghini and Maserati – all up there is 13,288 sqm of area.
Two hardstand zones cover another 2556 sqm (story continues below).
The Audi Centre was built for the dealer in 2011.
Euromarque was completed five years earlier.
The site spreads 7793 sqm with a third street frontage.
Autosports portfolio approaches $200m
Autosports moved into the Fortitude Valley buildings in 2016, signing a 10 year commitment.
On its numbers, the group said it will be ahead by owning over leasing; its net annual rent is speculated to be over $5.5m. The lease had two five year options.
It now also has flexibility to partner with a developer on a mixed use project – presumably an apartment complex with a lower level dealership Autosports can occupy.
Up the road, the world’s largest Mercedes-Benz distributor, Lei Shing Hong is planning to do just that after in 2016 paying Mercedes-Benz Australia c$40m for #365, with plans for four 20 level towers over a multi-storey showroom.
Last year, in Melbourne, the Ringwood Mazda operator outlaid $15m for its dealership, on nearly a hectare at 391 Maroondah Highway.
With that transaction, the business stopped paying $650,000 annual rent.
In late 2020, meanwhile, Charter Hall banked $203.75m selling 10 modern car yards, winding down two Direct Automotive funds.
In the east coast states and Western Australia, nine sold to the occupier, Eagers Automotive, then known as AP Eagers.
Upon settlement of the Fortitude Valley properties in June, Autosports will own Australian real estate worth $196.6m.
Sydney Olympic Park offices fetch $160.5m from Frasers
Also today, Dexus Industria REIT (DXI) announced the sale of two Sydney Olympic Park offices.
At 1A and 1C Homebush Bay Drive, Rhodes, it is banking $160.5m, speculated to reflect a seven per cent-plus yield; about half the lettable space is vacant.
Singapore listed Frasers Property is the buyer with plans to refurbish. Proceeds will repay debt.
“The sale progresses our strategy of creating Australia’s leading industrial REIT, enhances balance sheet resilience and reduces income risk across the portfolio and following the anticipated cancellation of surplus debt facilities, the next refinancing event will not be until mid-2024,” DXI fund manager, Alex Abell, said.
The fund still holds a $1.5 billion portfolio with 92 assets – the bulk (88pc) in the industrial and logistics sector – with a 6.2 year WALE.
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