This article is from the Australian Property Journal archive
IN an indicator of what is instore for the industrial property market, over $180 million worth of assets have changed hands across Brisbane and Sydney.
Investment and developer EG Funds has scored a massive windfall from two Sydney industrial sales totalling $101.1 million, realising a 41% capital gain in just four years.
At the same time, the $13 billion Charter Hall Prime Industrial Fund (CPIF) has acquired a prime industrial development site at Harcourt Road Darra in Brisbane’s south-west for $80.55 million, which it plans to develop a $350 million estate, adjacent to its completed $250 million estate.
The EG Australian Core Enhanced (ACE) Fund has sold its investment at 5 Williamson Road in Ingleburn and 81-87 Beauchamp Road in Matraville, for $62 million and $39.1 million respectively.
EG head of capital transactions Sean Fleming said these results demonstrate EG’s disciplined asset management strategy and ability to unlock significant value for investors.
“By identifying underperforming assets and leveraging their potential, we’ve demonstrated the success of our disciplined investment strategy. These sales are a testament to our ability to generate strong returns in a competitive market,” he added.
“These transactions highlight the strength of our strategy to acquire under-rented assets with clear pathways for value creation,” said Samual Robbie, fund manager of the ACE Fund. “Both properties exemplify how our active management approach delivers exceptional results for our investors.
“The properties were strategically acquired to capitalise on their untapped potential. At Ingleburn, EG recognised an under-rented asset with multiple buildings, offering flexibility for future occupation and the opportunity to curate a diversified tenant mix. This approach positioned the property for rental growth and long-term resilience in the highly sought-after South West Sydney industrial market,” he added.
EG acquired the Ingleburn property in August 2020 for $38.2 million. Prior to that, Leda paid $24.75 million for the asset.
“Similarly, the Matraville asset was underpinned by a high percentage of underlying land value and significant rental reversion potential. Located in the tightly held South Sydney industrial precinct, the property’s versatility allowed for leasing as a single offering or to multiple tenants, creating a stable and diverse income stream.
“The sales reflect strong buyer interest. These results reinforce the demand for high-quality industrial assets in strategic locations,” said Robbie.
The Matraville asset was acquired in 2021 for $33 million.
Located 700 metres from Port Botany, the Matraville property contains a vacant (6,240 sqm GLA) multi-tenancy warehouse that had previously generated an annual passing income of ~$1.282 million.
Centennial acquired the Matraville asset which follows its purchase last week of a warehouse facility within Brisbane’s Australia TradeCoast industrial precinct, in an $18.5 million deal with property giant Lendlease.
Centennial head of property funds David Cupit said the site caught the company’s interest given it could be acquired with ‘vacant possession’ and the warehouse requiring only minimal capital expenditure to bring it up to a standard where it could generate premium rental returns.
“We have been seeking a site of this calibre in Sydney’s inner south for some time but have been pragmatic in waiting for the right opportunity.
“Following refurbishment, the asset’s net market income has been assessed at $375 per square metre (psm), which is up 83% on the site ‘s previous rental rate of $205 psm,” Cupit said. “Once refurbishment works are complete, we are confident of achieving these rents which will be driven by the refurbished accommodation and the site’s superior location in one of the country’s most land-constrained industrial markets.”
“We believe now is the right time to implement our mid-space strategy given much of the sector’s strength lies within the occupier market, supported by a low vacancy rate, significant levels of rental growth and low uncommitted supply.
“It’s these solid market indicators, coupled with the site’s great location close to major transport infrastructure, plus its flexible zoning to accommodate both industrial and large format retail, that provides an excellent opportunity for Centennial to take advantage of the market. A lack of newer warehouse stock catering to the mid-size occupier market enables us to roll out our mid-space strategy to focus on businesses seeking between 870 to 1,300 sqm of space,” Cupit said.
Meanwhile up north, CPIF has bought a 17.5-hectare site within the prime infill logistics precinct of Darra, 12kms southwest of the Brisbane CBD.
The vacant site will be developed into a state-of-the-art logistics estate of approximately 100,000 sqm of GLA.
Charter Hall CEO David Harrison said as one of the last remaining large scale development sites of scale in the inner south-west, it is highly attractive to third-party logistics occupiers, direct-to-customer businesses, and high-end manufacturers.
“This strategic acquisition strengthens our capacity to service the full breadth of the Brisbane industrial and logistics market, and underscores our continued conviction for greenfield development sites appealing to customers from 10,000 up to 100,000 sqm of lettable area.”
CPIF fund manager Jack Walters added that the acquisition is in line with the fund’s strategy to invest and develop well-located, serviced and zoned land, enabling the fund to continue to provide investment grade accommodation for tenant customers demanding brand-new, high-quality, sustainable logistics.
These transactions come hot on the heels of over $600 million worth of industrial development sites hitting the market in the past week.
Last week ASX-listed explosive and fertilisers group Incitec Pivot Limited put its Gibson Island site at Murarrie in Brisbane to the market with expectations of over $250 million.
Australian Property Journal also reported that diversified property group Sandhurst Retail & Logistics is looking to offload the O’Herns Logistics Park in Melbourne’s northern suburb of Epping for around $350 million.
The EG transactions were handled by Colliers Gavin Bishop, Sean Thomson, Michael Crombie, Trent Gallagher, and Angus Urquhart, and JLL’s Ben Hegerty, Joel Scully, and Jack Kelliher.
Charter Hall’s acquisition was brokered by Cushman and Wakefield’s Tony Iuliano and Gary Hyland.