Irongate buys another two Brisbane assets

Irongate Group (IAP) has acquired two Brisbane industrial investments on a funds-through basis.

The properties, in Kingston (pictured, top) and Morningside, are costing a total $20.252 million.

The deals come seven weeks since the group outlaid $24.75m – reflecting a 5.3 per cent yield – for a three year old Pinkenba distribution centre rented to ecommerce business, Grays.

Kingston

At Kingston, about 25 kilometres south of the CBD, IAP is spending $14.32m on 57-83 Mudgee Street.

This asset will contain two distribution facilities – of 3250 sqm and 2270 sqm.

Waco Kwikform has committed to the largest for an initial eight years.

The other facility will be occupied by Construction Sciences, which struck a 10 year agreement.

The average rent across the two warehouses is $149 per sqm, IAP chief executive Graeme Katz said.

Settlement (for the land, priced at $3.05m) is due by mid-May.

Construction – and final payment – should take place in December.

The blended yield is 5.73pc, or 5.67pc after transaction costs.

Morningside

In Morningside, about six kilometres east of the city, IAP is spending $5.932m on Lot 24 Dunhill Crescent.

This 1016 sqm building has been pre-committed to 3M Australia as its Queensland head office and distribution centre.

The initial yield is 6.02pc – or 5.96pc post transaction costs.

Settlement of the land is also expected in May; IAP will then make progress payments until construction is complete, in November (story continues below).

3M’s lease is for an initial 10 years.

Starting rent is $352 per sqm- with fixed annual 3pc rises.

Brisbane represents relative value: IAP

“Both acquisitions are consistent with IAP’s strategy of acquiring good quality industrial properties with strong tenant covenants and long lease terms and increase IAP’s exposure to the strongly performing industrial sector,” Mr Katz said.

The Pinkenba property at 153 Main Beach Rd – adjacent to Brisbane Airport in the Australian Trade Coast precinct – was completed last month.

It comprises an 1852 sqm office/warehouse and 3.4 hectares of hardstand.

Grays is committed until March 2028.

“IAP believes the Brisbane industrial market currently represents relative value,” Mr Katz added.

Following these acquisitions, the manager is responsible for 34 properties worth a total of more than $1.1 billion.

The gross lettable area tallies up at nearly 350,000 sqm.

The portfolio’s Weighted Average Lease Expiry will rise; it was 4.8 years last September.

Rundle Mall acquisition

Meanwhile in the Adelaide CBD, the Irongate managed Irongate Templewater Australia Property Fund has teamed with Fortius to acquire Rundle Place for c$210m.

The latter launched a fund raising for it, last year.

Developed in 2013, the 23,000 sqm four level centre contains an Apple outlet, Coles supermarket and 50 specialty stores.

Nearly a quarter of the lettable area is vacant since discount department store, Harris Scarfe recently quit.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco