This article is from the Australian Property Journal archive
THE Centuria Industrial REIT has acquired three properties in North Geelong in Victoria, and Richlands and Hemmant in Queensland for $59.3 million on weighted average yield of 7.8%.
The trust has earmarked a further $10 million for capital expenditure to enhance the assets.
CIP fund manager Ross Lees said these acquisitions are consistent with CIP’s strategy to acquire quality assets in key metropolitan locations which appeals to a broader tenant market.
The most expensive purchase was the 75-95 & 105 Corio Quay Road, North Geelong property for $22.8 million on an initial yield of 8.2%. The property includes two buildings comprising 21,772 sqm on a 3.8 hectares site, and is fully leased to Boardriders Inc with a weighted average lease expiry of 4.3 years.
CIP paid $19.5 million on a yield of 7.4% for the 680 Boundary Rd Richlands property, which comprises 12,633 sqm of GLA on a 2.2ha site. It is also fully leased with a WALE of 3.3 years.
The Hemmant property was acquired with vacant possession for $17 million. The 12,553 sqm facility occupies a 4.8ha site with only 28% coverage.
“North Geelong is fully leased to a subsidiary of Boardriders Inc., a long-term tenant who has invested significant capital expenditure into the facilities. The asset is well located directly opposite the Port of Geelong, and within 10km of Avalon Airport.
“Richlands is also fully leased with a 3.3 year WALE, and located close to another recently acquired property 616 Boundary Road, adding scale within the Richlands industrial area.
“Hemmant is being acquired on a vacant possession basis, providing an immediate opportunity to reposition the asset, given it is well located within the prime Port of Brisbane precinct,” Lees said.
Following completion of the transaction CIP’s portfolio will increase to 45 assets with a value of $1.3 billion.
The trust will undertake an institutional placement to raise $70 million at an issue price of $3.05 per unit to fund the acquisitions, along with a Unit Purchase Plan to raise up to $5 million.
Meanwhile the trust has independently revalued nine of 42 properties as at 30 June 2019, resulting in an increase of $24.1 million, or 8.5% on prior valuations, and reflecting 32 bps of capitalisation rate compression on those properties. As a result of these revaluations, the portfolio weighted average capitalisation rate has firmed 8 bps to 6.46%.
CIP has also agreed to refinance $160 million of its overall $520 million facility to two new 3 year and 5 year tranches, increasing the tenor of that tranche by 2.7 years. CIP will also reset $110m of existing interest rate swaps to capitalise on the current low interest rate environment. As a result, CIP will have no debt expiring until FY22.
Following completion of the acquisitions and placement, CIP forecast FY19 FFO per unit of 19.3 cents; distributable earnings per unit of 18.8 cents, which is at the mid point of previous guidance. The FY distribution is expected to be 18.4 cpu and FY20 FFO growth of 2–3% over FY19 FFO.
