This article is from the Australian Property Journal archive
SINGAPORE’S sovereign wealth fund GIC is looking to capitalise on the e-commerce boom in Australia, by teaming up with Dexus to create a new $2 billion unlisted trust which will invest in logistics properties.
The Dexus Australian Logistics Trust will be seeded with a $1.4 billion, high-quality logistics portfolio, comprising mostly core logistics facilities located mostly in Sydney and Melbourne (97%). The weighted average lease expiry of the portfolio is 5.3 years with occupancy at a high 98%.
In addition, the JV will acquire a $138 million development landbank comprising interests in three land development, with a total future completion value of $0.5 billion, including:
- 50% interest of 11-167 Palm Springs Rd, Ravenhall, VIC
- 100% interest of 54 Ferndell St, South Granville, NSW
- 100% interest of 425 Freeman Rd, Richlands, QLD
GIC chief investment officer real estate Lee Kok Sun said the growth in e-commerce in Australia will continue to drive demand for industrial properties.
“This investment reflects GIC’s confidence in the long-term potential of Australia’s logistics sector. We believe the structural and consumption growth in Australia, particularly from favourable demographics and growth in e-commerce, will continue to drive demand for logistics properties,” Lee said.
Subject to FIRB approval, GIC will be DALT’s foundation investor, taking an initial 25% investment with put and call rights to acquire an additional 24% by June 2020. GIC will also take an initial 49% interest in the JV seed development portfolio.
Dexus CEO Darren Steinberg said the deal enabling capital to be recycled into Dexus’s development pipeline as well as boost third party assets under management to $14.3 billion.
“This new vehicle broadens our relationships, providing a stable long-term source of capital to invest alongside us through the cycle. We see further opportunities within the logistics sector as businesses seek to drive supply chain efficiencies and preferences for online retail continue to rise.
“The establishment of this vehicle builds on our track record which has seen us develop and lease 39 industrial development projects across 730,000 sqm in Sydney, Melbourne and Brisbane since 2010.” Steinberg said.
Proceeds from the sale will initially be used to reduce debt and provide capacity for future funding commitments, including Dexus’s broader development pipeline which is growing and stands at $2.0 billion , with an additional $2.9 billion of future potential concept developments which Dexus is shortlisted or in an exclusive position on.
Assuming no further acquisitions, the transaction is expected to have an immaterial impact on Dexus’s AFFO and distribution per security in FY19. Dexus maintains its market guidance for FY19 of distribution per security growth of circa 5%.
Australian Property Journal
