This article is from the Australian Property Journal archive
CROMWELL Property Group has sold the Masters Distribution Centre at Hoppers Crossing in Melbourne's south-west for $39.35 million on a 8.1% yield.
The property was purchased by Charter Hall Group’s Direct Industrial Fund, and the price is in line with the current carrying value and most recent independent valuation at 31 December 2011.
Cromwell CEO Paul Weightman said the decision to dispose of the asset was consistent with the group’s strategy of continually refining its property portfolio, with a focus on assets considered to have the highest risk-weighted return.
“The Hoppers Crossing facility was delivering a consistent yield following the new 10 year lease we negotiated with Woolworths in 2011. However, we believe we can achieve a higher medium-term return by investing in assets elsewhere,” he added.
Located at 364-426 Old Geelong Rd Hoppers Crossing, approximately 20km south-west of the Melbourne CBD, the property comprises approximately 52,364 sqm and a 325-bay car park set on a 14.5 ha site, with approximately 3 ha available for expansion.
It is fully leased to Woolworths as a distribution centre for the Masters Hardware business, with a weighted average lease expiry of 8.5 years.
Charter Hall’s joint managing director David Harrison said the acquisition increases DIF’s assets under management to $155 million within the defined equity raising period and given the target fund size of $200 million, provides the potential for the fund to acquire a sixth asset.
DIF’s portfolio now comprises five prime industrial properties located in metropolitan industrial markets across New South Wales, Queensland, Western Australia and Victoria, leased to national tenants including Australia Post, Coles Group, Grace Worldwide and Toll Holdings.
“Given the continued growth of the Australian economy and strong industrial property fundamentals, including low supply and rental growth, we anticipate the industrial market will continue to perform well,” Harrison added.
Woolworth’s has a 10-year lease over the property, signed in January 2011 after Kmart decided to move to a new $60 million purpose built facility at Truganina, by the Goodman Group.
The sale was negotiated by Colliers International director of industrial Tony Iuliano.
Iuliano said it was a major sale for Victoria’s industrial sector, adding that the strong result highlighted the shortage of A-grade stock and high demand for premium industrial assets in the Melbourne industrial market.
The Hoppers Crossing sale to Charter Hall came off the back of around $90 million worth of Victorian industrial property changing hands within the first quarter.
Iuliano said Melbourne’s industrial market was shaping up to be one of the strongest performing property sectors of 2012.
“Savvy investors are looking to the industrial sector for good buying opportunities in the current market. Increasing freight movements, ongoing demand from logistics and retail firms and a well-documented shortage of A-grade stock was likely to contribute to continued growth in the industrial sector during the remainder of the year.
“Investor demand for industrial assets is on the increase and this is a trend we will see continue throughout the remainder of 2012,” Iuliano concluded.
According to Colliers International forecasts, rental pressure was likely to intensify over the next 12-24 months across all markets as the impact of the land shortage became more pronounced.
Property Review
