This article is from the Australian Property Journal archive
SINGAPORE-listed Frasers Logistics & Commercial Trust (FLCT) has dropped another $61 million on Melbourne real estate, this time picking up three newly built, fully leased warehouses in the western suburbs from Goodman Group.
The Truganina properties are fully leased to four tenants including Goodride Tyres, automotive lighting company Stedi and building products supplier Stoddart Group with a weighted average lease expiry of 6.6 years and built-in 3.0% annual rental increases.
FLCT has just spent $60.25 million on a fully-leased, multi-tenanted A-grade office building in the south-eastern suburb of Mount Waverley.
Its new acquisitions are 1 Magnesium Place, 11 Magnesium Place and 17 Magnesium Place for $24.2 million, $17.35 million and $19.45 million respectively.
“This investment marks a continuing deployment of our divestment proceeds from the sale of Cross Street Exchange in Singapore and will provide FLCT with further exposure to the attractive Melbourne logistics and industrial market,” said Robert Wallace, CEO of the REIT’s manager.
“The new properties are of smaller tenancy sizes, providing a product offering that targets a differentiated tenancy base, making the new properties a complementary fit with FLCT’s existing industrial portfolio.”
FLCT’s exposure to the logistics and industrial sector increases to 66.3%.
JLL research shows the Melbourne west industrial precinct saw total take-up of 205,690 sqm in the March quarter, well above the 10-year quarterly average of 119,130 sqm, as the western region accounted for 52% of the total take-up in Melbourne for the same period.
The elevated demand levels have forced the current vacancy rate to below 1.0%, according to the CBRE data, and the precinct’s prime net rent grew around 15% over the 12 months to the end of March.
“In comparison to other eastern seaboard cities of Sydney and Brisbane in Australia, Melbourne west continues to provide an attractive rental affordability proposition,” FLCT said.
The Melbourne industrial market saw $1.13 billion worth of transactions in the first quarter of 2022, according to Real Capital Analytics, making it the second-most active market nationally. Yields have compressed to 4.3%.
Foreign players accounted for 40% of the $11.7 billion of transactions across the country in that period as travel restrictions eased. Singaporean entities making recent purchases in Australia include CapitaLand, which has spent $1.5 billion in Australia over the past six month, including the 120 Spencer Street office tower in Melbourne’s CBD for over $320 million.
Singaporean capital invested $13.8 billion in Australian real estate over 2020-21, according to the latest data from the Foreign Investment Review Board, second only to the United States.
