KM creates first single asset trust with Melbourne warehouse
KordaMentha arm KM Property Funds will create its first single asset trust with a Dandenong South property purpose-built for the original owners of Quest Carpets, which still occupies.
The 1.71 hectare holding, 43-55 Mark Anthony Drive, was picked up for $16 million – a 4.6 per cent net passing yield.
It will be held by a fund, KPMF Industrial01, backed by investors represented by St Kilda Road based Partners Private, which closed oversubscribed within days of calling for interest.
The associates (KMPF and PP) plan to build a portfolio targeting mid-market properties with value-add potential.
Elsewhere in the area – considered Melbourne’s most exclusive industrial region outside of the inner city – developer Pellicano last year snapped up the ex-Lunar Drive-in theatre for a speculated $40m.
Toyota Materials Handling, meanwhile, is constructing a distribution centre and showroom on Discover Rd, moving from Abbots Rd, which we reported this week, was leased International Mowing.
Angus Clark and John Guastella of Cameron Commercial marketed 43-55 Mark Anthony Dve.
43-55 Mark Anthony Drive
The Mark Anthony Dve property includes an 8420 square metre warehouse/office on which a 200kW solar system was recently installed.
Access is via six roller shutter doors.
The site also has full drive around access for up to B-double trucks.
Quest Flooring, nowadays owned by London listed Victoria PLC, is on a lease expiring mid-2026 when it will be presented with a five year option (story continues below).
Following that, the property would be considered to have development upside, with improvements covering less than 50pc of the block.
Demand for industrial areas in the Greater Dandenong council area – where vacancy is circa one per cent – is also expected to deliver the city’s first multi-storey warehouses – following Sydney, which has been proposing more of these over the past 12 months.
“What attracted us to the property was the calibre of tenant covenant, high quality construction, the high underlying land value and potential for capital growth,” KMPF director of Acquisitions, Tom Korda, said.
“We always look to protect our investors’ downside by buying close to or below replacement cost and given that construction costs are so high now, we see great value in buying existing built assets,” he added.
“The short three year weighted average lease expiry also offers investors the potential to capture market rent in the medium term,” according to the executive.
Fund oversubscribed
The Quest Carpets lease lines up rent rises with inflation rather than CPI – which is a favourable for landlords given the current high inflation backdrop expected to affect the market for at least the next 12 months.
“We are extremely proud to have worked with Partners Private on this exclusive opportunity to provide their investors with a high quality investment,” KMPF chief executive officer, Tom Davis, said.
“Partners Private was able to close out the raise within a couple of days and significantly over-subscribe in that time,” he added.
“Given the market conditions, we think it’s a great time to take advantage of the lull in competition and have a strong pipeline of mid-market, high growth industrial assets to continue to target alongside Partners Private in the near term,” according to the executive.
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