This article is from the Australian Property Journal archive
FRASERS Logistics & Commercial Trust has sold its 50% stake in a Brisbane chilled facility to global real estate investment manager DWS for a cool $152.5 million – 12.2% above book value and it acquired a prime Melbourne logistics property for $22.5 million, as institutional investors’ demand for this defensive asset class shows no signs of waning.
The trust has sold the remaining 50% of its ownership in the 99 Sandstone Place Parkinson property to DWS, which already owns the other half. The sale price is a 12.2% premium over the book value of $135.9 million as at 30 June 2020, and a 31.0% premium over the original purchase price of $116.4 million in 2016.
Completed in November 2008, the chilled 54,245 sqm distribution centre is located within Southlink Business Park in Brisbane’s outer south, 24km from the CBD. It is leased until 19 June 2115.
In Melbourne FLCT has acquired logistics property at 75-79 Canterbury Rd Braeside for $22.5 million from wholly-owned subsidiaries of Frasers Property. The modern facility comprises a gross lettable area of approximately 14,263 sqm and is located within the established Braeside Industrial Estate. It has a long WALE of approximately 4.9 years as at 30 June 2020 and is fully leased to IVE Group Ltd with a fixed annual rent increment of 3.0%.
The trust’s manager CEO Robert Wallace said the Australian industrial market, in particular the eastern seaboard cities of Sydney, Melbourne and Brisbane, remains one of the most sought-after sectors by both domestic and global players.
“Despite the COVID-19 pandemic, the investment volume has remained strong with total sales transacted at $1.7 billion during the first half year of 20207. The industrial and logistics sector in south eastern Melbourne continues to be popular with investors due to the strong market fundamentals, low levels of vacancy, limited supply and favourable demographics,” Wallace said.
This the latest in a long string of industrial property transactions, as institutional investors seek to grow their exposure in the sector, which is performing strongly during the coronavirus pandemic.
Last week the Dexus Australia Logistics Trust (DALT) paid almost $270 million for five industrial assets in Melbourne and Sydney. This follows Dexus and Singapore’s GIC spending $173.5 million on two industrial including a cold storage facility in Sydney.
One of the most active buyers is Charter Hall which last month paid $88 million for a glass manufacturing facility in Penrith Sydney and entered into a $214 million sale and leaseback with Owen-Illinois Australia.
Charter Hall and its funds have acquired a Minto logistics park for $207 million; it teamed up with Allianz to buy four ALDI distribution centres with for $648 million and acquired the Winc facility in Erskine Park for $115 million.
Even the retail focussed ASX-listed Charter Hall Retail REIT is expanding its focus, acquiring a stake in supermarket giant Coles’ distribution facility in Adelaide for $111.8 million.
In June Goodman Group signed Amazon to a new fulfilment centre in Brisbane and in Oakdale West Industrial Estate in western Sydney, whilst supermarket giant Woolworths is investing up to $780 million to develop two, an automated and semi-auto centres, at Moorebank Logistics.
International investors including Ascendas acquired a Yennora facility, South Korea’s pension fund is also looking to invest in the sector and Singapore’s ESR Cayman launched a $1 billion fund targeting prime logistics in Sydney, Melbourne and Brisbane.
Credit ratings agency Moody’s said industrial property values continue to be supported by e-commerce and increasing focus on supply chains.
“Unlike retail and office, we expect industrial property values will be flat to up slightly over the next 12-18 months. The pandemic has accelerated e-commerce penetration in Australia and increased focus on supply chains,” Moody’s said in a recent note.
