This article is from the Australian Property Journal archive
ACQUISITIVE player Centennial has spent around $163 million on prime industrial and logistics assets in Sydney, for their new $700m Enhanced Value Partnership (EVP) fund with Brookfield Real Estate Secondaries.
Two of assets were divested by Centuria, with the two adjoining industrial facilities in Brookvale NSW selling got more than twice what the group picked them up for in 2012.
Centuria Capital Group has exchanged conditional contracts with Centennial for the two assets at 114 and 120 Old Pittwater Road for $83.64 million, which is forecast to deliver a 13.8% internal rate of return (IRR) to the assets; close-ended fund investors.
Gavin Bishop and Sean Thomson from Colliers, alongside Jason Edge, Jack Pershouse and Chris O’Brien from CBRE, were appointed as sales agents for the transaction.
“These well-positioned, strategic landholdings were acquired in July 2012 and have delivered compelling returns to our investors throughout the past 11 years,” said Ross Lees, head of funds management at Centuria.
In 2012, the group spent $40.5 million on the Brookvale properties with the assets underpinning the Pittwater Road Trust (PRT) and the new purchase price representing a 106% uplift.
“With strong market tailwinds, we believe now is an opportune time for divestment and to capitalise on the PRT’s full fruition,” added Lees.
“We will continue to provide our unlisted investors across Australia with further well-positioned industrial investment opportunities in the future.”
The two assets will provide the EVP fund a presence in Sydney’s mid-space, urban logistics sector with both sites offering solid passing income, revenue growth and excellent incremental redevelopment opportunities.
“The two new assets are a perfect fit for our $700m EVP fund which recently closed oversubscribed,” said Paul Ford, executive director and CEO of industrial & logistics at Centennial.
“We’ve been really selective in our site choices in Sydney and are very happy with the Prestons and Brookvale sites given their land rich nature along with flexible improvements that align with our niche strategy, focusing on mid-space, urban infill sites within land constrained or last mile logistics areas.”
The assets comprise a consolidated 41,870sqm landholding within the urban infill North Sydney market, sitting around 16km out from the CBD and providing access to 971,690 households within a 60-minute drive.
The properties are occupied by three warehouses ranging from 5,200sqm to 8,600sqm, which are leased to six tenants, across two storeys and including 538 car parks.
The tenants include the Woolworths Group, Fujifilm, Services NSW and local library supplier, James Bennett.
“Another factor in our decision to purchase the site was the Draft Brookvale Structure Plan’s new zoning height limits which may be increased to possibly pave the way for a multi-storey warehouse,” added Ford.
“The asset currently has a 40/60 per cent office to warehouse ratio with the potential of converting less favoured offices into high-tech and warehouse space to better suit market demand.”
Settlement for 114 and 120 Old Pittwater Road is anticipated for late September and is subject to the completion of all condition precedent.
Meanwhile, Centennial spent $79 million on 115 – 121 Jedda Road in Prestons in a transaction with Charter Hall, in a deal brokered by Cushman and Wakefield.
The assets, located in Sydney’s south west in the established industrial corridor, comprises a 5.3-hectare site with two large format generic refrigerated logistics facilities.
“The Prestons site is extremely well located adjacent to major road and transport infrastructure networks together with the new Western Sydney Airport, 13km from the site and due to open in 2026,” said David Cupit, head of property funds.
“It is a high income producing asset offering certainty of income from a multi-national tenant, along with the ability to create additional GLA. Given the site’s suitability for future development and reconfiguration, we are confident of adding value to the asset and repurposing it into an institutional-grade investment.”
The facilities are occupied by Primo Smallgoods, who sub-leases part of its warehouse to supermarket giant Aldi.
“Underpinning the asset’s de-risked cash flow is Sydney’s south western suburbs having some of the tightest vacancy rates in the country at around 0.1 per cent. The location is currently experiencing a severe lack of available developable land, with demand for scale in the south west continuing to drive land value and growth,” said Tony Iuliano, international director of industrial and logistics at Cushman & Wakefield.
