This article is from the Australian Property Journal archive
DEUTSCHE Bank’s asset manager DWS has acquired a half-share in a Coles distribution centre, in Brisbane’s Parkinson, in a record-breaking $134.2 million deal with Singapore-listed Frasers Logistics & Industrial Trust.
The deal comes nearly 12 months after FLT sold off the Coles distribution facility in Sydney’s Smeaton Grange to two Charter Hall funds for $90.5 million.
Purpose built for Coles in 2008, the Parkinson cold storage and freezer distribution centre of 55,245 sqm at 99 Sandstone Place is fully leased to the supermarket major with 13.1 years remaining on the current term.
It includes 3,285 sqm of office space and is located within the Southlink Business Park and offers good connectivity to the Mount Lindesay Highway, Logan Motorway and the Gateway Motorway.
FLT has around 96 years remaining in its leasehold interest in the property, which it acquired from a subsidiary of Frasers Property Australia. The sale of the half-share is on a freehold basis, and reflects a 5.6% yield.
Selling agents Tony Iuliano, Adrian Rowse and Gary Hyland of JLL said the sale represented the largest individual industrial asset transaction by value in Australian history – based on the equivalent price for a 100% interest – and received interest from local and offshore major institutional investors.
JLL said the cold storage industry and continued significant capital investment into the sector would continue to grow exponentially.
Distribution centre transactions over the last 12 months include the Coles centre in Heathwood, for $105 million, and Logos paying $119 million Kmart’s facility in Melbourne’s Truganina, which JLL said demonstrate the ongoing strong demand for super-prime assets within the logistics market.
The transaction price at Parkinson comes in at 8.8% above the property’s book value as at March 31st, of $123.3 million based on a 50% interest, and at a 15.3% premium to the original purchase price of $116.4 million as at FLT’s initial public offering in 2016. Frasers said the price took into account the latest independent valuation of the property, conducted by Urbis, $134.2 million as at the beginning of May.
FLT will continue to co-own and co-manage the property. Coles is currently FLT’s single largest tenant at 7.0% of GRI, which will to reduce to around half of that as a result of the deal. Robert Wallace, chief executive officer of the REIT manager, said the deal would provide a strategic opportunity for FLT to reduce its portfolio’s tenant concentration risk.
“DWS has a proven track record in Australia’s industrial sector and has strong familiarity with cold storage logistics assets. This partnership is a great opportunity to bring together the mutual strengths of both FLT and DWS in the ownership and management of industrial properties,” he said.
Victoria Sharpe, head of real estate for Asia Pacific with DWS, said the property provided an “attractive opportunity to acquire a super prime, refrigerated, logistics facility”, and marked the first investment in Australia for its open-ended Asia core real estate strategy.
Completion of the deal is expected in the third quarter of 2019.
FLT sold the Smeaton Grange facility of 61,261 sqm at a 40.3% premium to book value, and at a 39.2% uplift on its purchase price of $65 million when it was listed in 2016.
