Lendlease, Morgan Stanley seed fund with $430m portfolio

Lendlease picked up this Campbelltown warehouse from a Mirvac/Morgan Stanley mandate, in July.

Lendlease and Morgan Stanley Real Estate Investing have acquired five warehouses and three blocks of industrial land which, when developed, will price the portfolio at $430 million.

The $130.1m recently paid for 1 Eucalyptus Place, Eastern Creek (outlined, yellow), reflected a 3.62 per cent yield.

The vendor is EMKC which will now seek occupiers for the vacant tracts, and, via its APAC business, undertake property and facility management services.

Amongst the investments is GAM Steel’s new 58,000 square metre distribution centre (pictured, top), on 13.9 hectares beside the West Gate Freeway, in Melbourne’s Altona North.

Two more established warehouses are in Glendenning, about 40 kilometres west of Sydney.

The others are in Richlands (Brisbane) and Salisbury South (Adelaide).

All up they contain 100,000 sqm of lettable area, leased on initial 15 year terms.

The three development sites are in Altona North and nearby Truganina, and Lytton, near Brisbane Airport.

Industrial investment vehicle

The eight properties will seed an industrial investment vehicle the owners will hold in equal stakes – though Lendlease will sell down its share to institutional partners in time.

“The intention is to grow the joint venture through the acquisition of…core industrial assets provided through pipeline opportunities sourced by Lendlease and its development manager EMKC,” a group statement said.

“EMKC is delighted to be partnering with Lendlease and Morgan Stanley Real Estate Investing for the development and growth of the new joint venture industrial platform,” its director and co-founder, Edward McKenna, added (story continues below).

“With a strong focus on medium to large format industrial and logistics developments across the east coast of Australia, EMKC is well placed to provide an ongoing pipeline of develop-to-core assets for the partnership over coming years,” according to the executive.

Chris O’Brien and Rory Hilton, of CBRE, brokered the deal.

Lendlease spends big on industrial

With the latest deal, Lendlease has outlaid $720m on industrial product since June.

“The…sector has been a strong performer for Lendlease and this acquisition provides additional scale and diversity to our industrial platform with development opportunities that are increasingly attractive to our investors,” Scott Moseley. Managing director of Lendlease Investment Management, said.

“The growth in e-commerce, improvements in automation and the demand for last mile logistics and pick-up convenience for shoppers are key themes that will continue to drive growth,” he added.

Lendlease was behind a landmark purchase, in May, of an Eastern Creek property – the $130.1m outlay putting the yield at 3.62 per cent, a benchmark for an investment grade industrial asset.

In July, for its Australian Prime Property Fund, the manager spent $161m for three more east coast warehouses.

Coincidentally, that vendor was a Morgan Stanley mandate with Mirvac.

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Marc Pallisco

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