This article is from the Australian Property Journal archive
CENTURIA Industrial REIT has claimed Telstra’s data centre complex in south east Melbourne for $416.7 million in another major sale and leaseback deal, and has launched an equity raising to partially fund the deal and other acquisitions that take its portfolio value beyond $2 billion.
The fully underwritten entitlement offer is at $3.15 per share, 4.8% below its last close.
Telstra will enter into a 30 year triple net lease at the Clayton data centre with two 10 year options. The national telco will retain ownership of all IT and telecommunications equipment, as well as ongoing operations and responsibility for building upgrades and repairs, future capex requirements and security.
CIP is also buying the Easy Signs industrial facility in Smeaton Grange for $16.4 million, and the Hellman Worldwide distribution centre in Tullamarine for $14.0 million. They have respective WALEs of 9.7 and 2.7 years.
The transactions take CIP’s portfolio weighted average lease expiry to 10.2 years, and 24% of income derived from triple net leases. Telstra will also become CIP’s largest tenant, representing 13% of the portfolio’s income.
“The data centre acquisition also enables CIP to expand into the industrial sub-sector of data centres, a continually growing sector particularly in light of increased demand that has resulted from COVID-19’s impact and reliance on digital infrastructure,” Jesse Curtis, CIP fund manager said.
Telstra CEO Andrew Penn said the sale was another marker of progress on the company’s T22 strategy, which has now reached over $1.5 billion of its target to monetise some $2 billion of assets and strengthen its balance sheet.
Last year, Telstra announced the establishment and part sale of the unlisted property trust of 37 properties valued at $1.43 billion, in which Charter Hall took a 49% share. Part of the sell-off included the Edison Exchange building in Brisbane, for $57 million to Singaporean group Firmus Capital.
Some 25 kilometres from the Melbourne CBD, the Clayton complex spans 3.2 hectares and incorporates 10 buildings, including Telstra’s newest 6.1MW data centre and its adjacent 6.6MW data centre and associated energy centre.
The transaction is expected to be completed by the end of August.
Well over $1 billion of sale and leaseback deals and offerings have been active recently. Supermarket Aldi sold four distribution centres along the east coast for $648 million, to a partnership between Charter Hall and Allianz. Charter Hall has also just entered into a $214 million portfolio sale and leaseback agreement with Owens-Illinois Australia, and late last year took a 49% interest in a $1.7 billion portfolio of 225 BP-branded petrol stations.
CIP posted an uplift in full year funds from operations to $63.5 million from $50.0 million. FFO per unit slipped to 18.9 cents per unit, although distributions per unit increased 1.6% to 18.7 cpu.
FFO guidance for FY21 is 17.4 cpu, and distributions 17.0 cpu.
Statutory profit for FY20 of $75.3 million was lower than the $88.8 million one year earlier.
The portfolio WALE increased from 4.3 years to 7.2 years as at the end of FY20 following leasing deals across 122,000 sqm. Seven acquisitions combined with valuation increases boosted the portfolio value from $1.221 billion to over $1.602 billion. Following this growth, CIP has been included in the S&P/ASX 200 index.
“Throughout FY20, industrial assets have continued to demonstrate their resilience particularly against the backdrop of COVID-19. The rising trend of e-commerce, particularly for non- discretionary items, such as groceries and pharmaceuticals, is driving leasing demand along with manufacturing and packaging,” Curtis said.
Just over half of the trust’s portfolio income is derived from tenants directly linked to the production, packaging and distribution of consumer staples and pharmaceuticals.
Value add initiatives have included double the Townsville Regional Distribution Centre to 10,416 sqm, where it reset its lease with major supermarket Woolworths, and repositioning and leasing 46 Gosport St in Hemmant.
The trust strengthened its balance sheet with 27.2% gearing.
