This article is from the Australian Property Journal archive
SINGAPORE Exchange-listed Frasers Logistics & Industrial Trust has splashed A$644.7 million on 12 prime logistic properties in Australia and Germany.
FLT will acquire the portfolio from Frasers Property, comprising nine properties in German for €320.3 million and three in Australia for A$125.5 million.
The three Australian properties are:
- the Avery Dennison Materials and GM Kane and Sons facility, which forms part of the near the Logan Motorway in Queensland, was acquired for $25.2 million. The 15,456 sqm property is 100% occupied with a weighted average lease expiry of 3.9 years.
- The trust paid $34.8 million for the Dana Australia, Pinnacle Diversity & Licensing Essentials facility in Melbourne’s south-eastern suburb of Keysborough. The 25,762 sqm facility is 100% occupied with a WALE of 4.2 years.
- Finally, it bought the FDM facility in Eastern Creek Sydney for $65.5 million. the 32,894 sqm property is also 100% occupied with a WALE of 5 years.
CEO Robert Wallace said the Australian economy remains well-supported by strong levels of public infrastructure spending, non-mining investment, as well as population growth.
“The Australian logistics market, in particular Sydney, Melbourne and Brisbane, remains one of the most sought-after sectors by both domestic and global players. Occupier demand has also remained strong with gross take-up of 2.6 million sqm in the last 12 months prior to March 2019,” he added.
According to JLL research, Australia has the fastest growing trade flows with approximately 5.5% annual growth in import volume of goods and just under 6% of export growth p.a.
Behind Australia is Germany with approx 3.5% import and 5% export growth p.a.
Wallace said as the largest economy in Europe, Germany remains resilient with strong foreign trade and industrial production, and its labour market showing robust growth.
“Being Europe’s largest logistics hub, demand for German logistics space remains strong, with a record take-up of approximately 7.3 million sqm in 2018 driven by core sectors such as logistics, trading and manufacturing, amidst limited supply,” Wallace continued.
Post completion, FLT’s portfolio value will increase to A$3.5 billion comprising 93 properties including 62 in Australia (56.3%), 26 in Germany (35.8%) and five in the Netherlands (7.9%), totalling 2.3 million sqm, boasting a WALE of 6.7 years.
As part of the deal, FLT has a right of first refusal over the remaining 35 Australian and European logistics and industrial assets amounting to approximately 1.1 million sqm.
Meanwhile JLL research shows transport-logistics and retail sectors accounted for 60% of total take-up of industrial floorspace in Australia in 2018, with continuing growth in food retailing which currently totals around $133 billion in Australia.
Director of industrial research Sass J-Baleh said the food and grocery sector is expected to be one of the major drivers of demand for industrial space and this is not only in the form of transport distribution, logistics and cold storage space, but also with respect to space for food development and manufacturing.
The share of gross take-up in industrial floorspace recorded within the Transport, Postal & Warehousing sector in Australia has averaged 33% over the past five years.
Despite this, the manufacturing sector still represents a significant proportion of take-up levels, averaging 25% over the past five years, as well as a considerable share of GDP.
Figures show that Transport, Postal & Warehousing and Retail Trade accounted for nearly 60% of the total take-up of industrial floorspace in Australia in 2018. In comparison, Manufacturing accounted for 22%.
JLL’s head of capital markets industrial & logistics – Australia, Tony Iuliano said major manufacturing facilities that serve the food industry are relatively resilient – serving both the local and global market.
“There has been significant capital investment into cold storage, which is a growing sector that ultimately services the population.
“Investment capital flows for the industrial sector will continue to drive yields to levels never seen before in this country,”
JLL found manufactured products represent around 34% of Australia’s total merchandised goods that are exported (by value).
J-Baleh said oover 2018, the value of exports from the manufacturing sector increased by 11%, above the 10-year annual average of 4%.
“Further, the value share of food product manufacturing of total manufactured exports has been increasing over the past decade, currently representing 25%, or $29 billion.
“This export flow has a big impact on industrial property demand – particularly around major industrial infrastructure including ports, intermodal terminals and motorway networks – and boosts warehouse and logistics activity,” she concluded.