Centuria Property Fund No 2 has purchased a $43 million Ormeau logistics investment for one of its trusts.
The deal with ESR Australia for the five year old Maxwell Cold Storage occupied facility at 1 Lahrs Road is being struck on an initial 5.5 per cent yield.
The Weighted Average Lease Expiry is 6.5 years.
Centuria Industrial REIT (CIP) will hold it, using funds within its existing debt facility to pay.
The entity has acquired six assets worth a total of $523m this financial year.
In July a private investor spent $12.2m on a modern cold storage facility at 18 Motorway Circuit, Ormeau, occupied by butcher Top Cut Foods.
That campaign, which was off-market, as opposed to Lahrs Rd, was struck at a much higher yield (nearly eight per cent).
CIP’s Ormeau investment
On 2.1 hectares, the 9554 square metre warehouse is in the Yatala Enterprise Area, the corridor between Brisbane and the Gold Coast.
It includes -22 Celsius main and -28 blast chambers.
The tenant, a subsidiary of Jack Cowin’s Competitive Foods Australia, which also holds Hungry Jack’s in its stable, has been the only occupier.
Dealing in imported and quarantine food, and Halal meats, Maxwell Cold Storage’s major customers include Bulla, Coles and Woolworths.
Colliers International’s Gavin Bishop, Simon Beirne and Sean Thompson with JLL’s Tony Iuliano and Gary Hyland marketed it for ESR Australia via an expressions of interest campaign which closed on September 2.
Centuria head of Funds Management, Ross Lees, said the tenant “complements the existing array of high quality blue-chip tenant clients within the CIP portfolio”.
Tenant demand for cold storage is outstripping supply: CIP
CIP fund manager Jesse Curtis added that since COVID-19, demand for refrigerated distribution centres has increased in response to a surge in online grocery shopping.
“Additionally, there has been rising demand from both food and pharmaceutical related users requiring climate-controlled facilities (story continues below).
“This is creating an environment where tenant demand is outstripping supply”.
Mr Lees said “we are confident cold storage is a rising sub-market due to its long-term leases, strong tenant covenants, and unmet investment demand”.
“The Ormeau asset is a further addition to CIP’s asset base providing refrigerated space, along with the recently expanded Townsville Regional Distribution Centre constructed for Woolworths, which was officially opened last Friday”.
Investor demand for cold storage is outstripping supply too: agent
“The cold storage sector has been a big focus for investors in 2020 as a result of the favourable underlying drivers of population growth, growing food consumption and the rise of the Asian middle class,” Mr Bishop said.
More widely – covering the Australian industrial and logistics sector – the agent estimates $26b of capital is presently chasing product.
“With just over $3.5b trading so far in 2020, [the Ormeau deal] highlights the significant mismatch between supply and demand and the significant volume of unsatisfied capital looking to be placed”.
Covering the comparable period at the same point last year, this was $3.38b.
“For Brisbane, over $530 million has traded in 2020,” the executive said.
CIP’s exposure to food and cold storage ups to 30pc following deal
Mr Curtis said non-discretionary services, food distribution and cold storage industries are target CIP assets
The acquisition of 1 Lahrs Rd, he added, increases the trust’s exposure to food and cold storage related users to almost 30pc by income.
The trust is Australia’s largest domestic pure-play industrial REIT.
Following the settlement of the Ormeau facility, it’s portfolio will comprise 56 properties and be worth more than $2.1b.
Fifteen of these assets are in Queensland.