This article is from the Australian Property Journal archive
SINGAPORE Exchange listed Ascendas Real Estate Investment Trust (A-REIT) has expanded into Australia with the $1.073 billion acquisition of an industrial property portfolio from GIC and Frasers Property Australia, on a 6% yield.
The acquisition is expected to generate a net property income yield of approximately 6.4% pre-transaction costs in the first year (6.0% post-transaction costs).
The acquisition of the 26 properties portfolio will make A-REIT the eighth largest industrial landlord in Australia.
CEO Tan Ser Ping said the acquisition is complementary to A-REIT’s portfolio.
“We are excited by this unique opportunity to make a strategic investment in Australia.
“The Australian industrial real estate market is mature, transparent and provides opportunities for growth underpinned by domestic consumption and population growth.
“The proposed acquisition is in line with A-REIT’s disciplined value-adding investment strategy of acquiring good quality, income-producing assets with established tenants,” he said.
Tan said the acquisition also provides immediate scale in a new market and will diversify A-REIT’s portfolio geographically, increasing the contribution of overseas investment (by asset value) from 4.0% (China) to 14.0%. This is in line with A-REIT’s investment target for overseas markets to account for 20.0% to 30.0%.
“With the size and geographical spread of the target portfolio, A-REIT will be able to establish a strategic presence as the 8th largest national industrial landlord in the Australian market.
“With this beachhead, A-REIT could explore potential opportunities to expand its footprint through partnerships with property consultants and local real estate partners to provide greater choices for industrial property users,” he continued.
The portfolio comprises 26 properties with a gross floor area of approximately 630,946 sqm and land area of 1,208,427 sqm.
The portfolio consists nine properties in Sydney and Melbourne, seven in Brisbane and one in Perth.
The Sydney portfolio comprises 198,129 sqm and includes:
– 1A & 1B Raffles Glade (Ceva, QLS)
– 7 Grevillea St (Kmart)
– 5 Eucalyptus Pace (CH2)
– Lot 4 Honeycomb Drive (Officemax)
– 1-15 Kellet Close (Strandbags / BevChain)
– 94 Lenore Drive (DB Schenker)
– 484-490 Great Western Highway (Agility/Ingram)
– 494-500 Great Western Highway (Linfox)
– 1 Distribution Place, Seven Hills (Sigma)
The Melbourne portfolio comprises 255,956 sqm and includes:
– 14-28 Ordish Rd (Mondelez)
– 35-61 South Park Drive (API)
– 2-34 Aylesbury Drive (Toll)
– 81-89 Drake Boulevard (DB Schenker)
– 676-698 Kororoit Creek Rd (Silk)
– 700-718 Kororoit Creek Rd (Nestle)
– 9 Andretti Court (Goodyear)
– 31 Permas Way (Pacific Brands)
– 162 Australis Drive (Tatura Milk/Blue Marlin)
The Brisbane portfolio comprises 155,966 sqm and includes:
– 62 Sandstone Place (Fuji Xerox)
– 92 Sandstone Place (Kimberly-Clark)
– 62 Stradbroke St (vacant)
– 82 Noosa St (Coles)
– 77 Logistics Place (McPhee)
– 99 Radius Drive (Asaleo Care)
– 2-56 Australand Drive (Ceva)
The Perth portfolio consists a 20,895 sqm facility at 35 Baile Rd (Blackwoods).
This the second largest industrial deal Asia Pacific.
JLL and Colliers International negotiated the deal with offshore introduced by JLL’s Michael Fenton and Chris Key and the domestic investors introduced by Colliers’ Malcom Tyson, Gavin Bishop, Tony Iuliano and Simon Beirne.
Fenton said the five short-listed bidders were all offshore investors who lodged bids above $1 billion – demonstrating the weight of capital seeking exposure to Australia’s industrial market, equating to $10 billion of unsatisfied demand.
“Offshore groups are seeking to expand beyond the office, retail and hotels sectors. Australia’s industrial market presents attractive investment characteristics including strong tenant covenants and long weighted average lease expiries (WALE).
“This portfolio offering was highly contested by offshore groups looking to acquire immediate scale in the largest ever offering of high quality, institutional grade logistics assets in Australia,” Fenton said.
JLL’s head of corporate finance – Asia Pacific, Chris Key said the competitive nature of the bidding for this portfolio demonstrates the continued demand and capacity for investment in Australian real estate and the industrial sector.
“We continue to see strong levels of capital allocation by offshore investors into Australia. For institutional investors it remains a core investment destination within the Asia Pacific region and benefits from having a mature and transparent market with sufficient liquidity to access attractive opportunities. When looking at the process undertaken on this portfolio it is very apparent that investors from around the world remain attracted to the Australian market and are prepared to aggressively pursue the right opportunities,” Key said.
The Australian industrial investment market had a record year in 2014, recording more than $5.1 billion of sales, exceeding the previous record set in 2007 and increasing 39% on 2013 transaction volume, according to JLL.
Tony Iuliano said offshore investors purchased $2.63 billion worth of Australian industrial property throughout the 2014/15 financial year, this was equivalent to 41% of all transactions for the sector over that period.
Colliers managing director of industrial Malcom Tyson said this transaction is the largest of its type in Australian industrial history.
“The strong result is a clear indication of the significant demand for high quality Australian industrial assets, from both local and offshore investors,” he said.
Simon Beirne said logistics and transport are the driving force in the Australian industrial sector at present.
Gavin Bishop said yields in the Australian industrial market are still more favourable than those of other international markets, so global buyers will continue to seek opportunities in this market.
Australian Property Journal
