This article is from the Australian Property Journal archive
CHARTER Hall has continued to buy up industrial assets across its platform, with its Direct Industrial Fund No. 4 snapping up a pair of Patties Foods sites Victoria for $141 million – including the world’s largest pie manufacturing facility.
They include the bakery in Bairnsdale and fast-growing ready meals facility in Pakenham, Victoria, with a combined site area of 27.2 hectares. The improvements comprise 46,175 sqm of gross lettable area for a low 17% site coverage.
Patties has committed to 30-year triple net leases over the sites with fixed annual 3% reviews. One of the largest pie manufacturers in the world, it produces iconic Australian brands, including Four’N Twenty, Patties, Herbert Adams, Boscastle, Nanna’s, Ruffie Rustic Foods and the recently acquired Fitness Outcomes, for domestic and global export.
Patties has pumped more than $37 million into the two sites over the last five years for capacity expansion and automation.
The Bairnsdale site at 169 Princes Highway encompasses 158,316 sqm of land and is Patties’ main production facility and the world’s largest pie-making site, utilised specifically to produce pies, sausage rolls and pastries. It is split into sections for food manufacturing, meal preparation and packaging areas, and also includes offices, warehousing and administration areas.
At 28-46 Bald Hill Road, the Pakenham property has a 22,384 sqm purpose-built food production facility that combines food grade manufacturing and meal preparation, packing, warehouse, cold storage and office facilities.
The World’s largest pie manufacturing facility at 28-46 Bald Hill Road Pakenham
Patties Foods chief executive officer, Paul Hitchcock said the sale and leaseback is part of the business’s future growth strategy.
“Both facilities are critical to Patties Foods’ operations and this arrangement enables the company to invest in additional growth opportunities to support our people, business and brands.
“The business has recently entered new categories via acquisition, and we are now in a position to continue this expansion.”
In recent years, Patties has also bought gourmet pie business Boscastle, New Zealand group Leader Foods, and meal solutions business Australian Wholefoods.
The transaction was jointly managed by Tony Iuliano and Adrian Rowse of JLL and Andrew Grant of Charter Keck Cramer.
Charter Hall has now acquired more than $2.3 billion in industrial and logistics facilities so far this financial year, and $6 billion in the past three years. Its total industrial portfolio now stands at $12.4 billion with a $2.3 billion development pipeline. Charter Hall has also just secured backing from Dutch pension fund PGGM for a new $800 million industrial real estate wholesale partnership.
Sean McMahon, Charter Hall’s chief investment officer, said the portfolio acquisition continues the group’s sale and leaseback strategy which has resulted in more than $10 billion of sale and leaseback transactions in the past six years. In the past 12 months, it has collected $930 million worth of Aldi distribution centres alongside Allianz, and was involved in the $214 million portfolio agreement with Owens-Illinois Australia, just taking into account the industrial sector.
The acquisition also increases Charter Hall’s exposure to the food logistics, owning sites occupied by Coles, Woolworths, Metcash, ALDI, Inghams, Coca-Cola Amatil, Arnotts, and Marley Spoon.
“We actively seek out properties leased to tenants in the consumer staples and food logistics sector because our investors consistently tell us that they value the defensive and stable cashflows these properties generate over the long term,” McMahon said.
The pandemic accelerated the rush to industrial assets as warehousing and logistics demands skyrocketed, and some $45 billion of capital is looking to be deployed into Australian industrial real estate this year. The attraction has been on full display this week, with ESR and Singapore’s sovereign wealth fund GIC acquiring 45 assets from private equity firm Blackstone for $3.8 billion in Australia’s largest-ever logistics portfolio transaction, which was also handled by JLL’s Tony Iuliano.
Charter Hall Direct CEO, Steven Bennett said the Charter Hall Direct Industrial Fund No. 4’s weighted average lease expiry is now extended to 12.3 years. Occupancy is 99.9% and the fund is currently providing a distribution yield of 5.9% per annum.
“The acquisition is consistent with DIF4’s strategy to acquire industrial properties leased to quality tenants on long term leases,” said Bennett.
The $1.5 billion fund has capacity to grow further to over $2.0 billion.
