This article is from the Australian Property Journal archive
QANTAS has netted $802 million from the sale of nearly 13.8 hectares of land near its Sydney headquarters to consortium led by logistics property player LOGOS and Australian Super, as the national carrier looks ahead to an earlier resumption of international flights than planned.
In a long-term sale and leaseback deal, Qantas sold a 21,795 sqm distribution centre, and a further three development sites totalling 98,645 sqm immediately adjacent to the Sydney Kingsford Smith Airport Precinct.
They will be redeveloped by the buyers into a $2 billion four-level ramp up, logistics, e-commerce and last-mile logistics hub.
Qantas could realise more than $1 billion in total as it holds further discussions with LOGOS about the sale of additional land lots covering three hectares, and development options that include a dedicated Qantas precinct.
Initially, it had expectations of over $500 million for the portfolio. Qantas CEO Alan Joyce said the company went into the sales process open-minded about whether it would sell some, all, or none of the land depending on the response from the market.
“That response was extremely strong and it has resulted in the sale of all the land,” he said.
“We’ll use these funds to help pay down debt that we’ve built up during the pandemic. The strength of this sale and its impact on our balance sheet means we can get back to investing in core parts of our business sooner.”
Qantas posted a $1.9 billion annual loss for 2020 and a $1.7 billion loss for 2021 as the pandemic halted international and domestic travel. It is in the midst of a cost-cutting program it hopes will save $1 billion by 2023 that has seen thousands of jobs slashed.
On Friday, it brought forward the resumption of international flights to Sydney by two weeks to the 1st November after announcements from the NSW state government and Prime Minister Scott Morrison.
LOGOS described the Qantas offering as “one of the last available scalable logistics and commercial development sites in the coveted South Sydney market”.
LOGOS made the purchase backed by the Abu Dhabi Investment Authority via its 2014-founded LOGOS Australia Logistics Venture (LALV), together with partner AustralianSuper.
LALV has developed a $2.7 billion logistics portfolio across Australia since its inception in 2014. LOGOS and AustralianSuper, meanwhile, teamed up to acquire the Moorebank Logistics Park in Sydney mid-year for $1.7 billion.
“To acquire this site at Mascot is a rare opportunity to further develop a market-leading e-commerce, distribution and commercial hub between Sydney ports and the ultimate distribution destinations in Australia’s main gateway city,” LOGOS head of Australia & New Zealand, Darren Searle said.
“The site is a key freight gateway for the airport and offers unparalleled connectivity as a critical link to supply chains around the country.”
Plans for the site will be furthered on completion of the deal, anticipated in December.
LOGOS’ assets under management in Australia and New Zealand now extends to circa $13 billion.
AustralianSuper head of property, Bevan Towning, said growing AustralianSuper’s investment in “major logistics assets that are focussed on the growing demand for e-commerce and distribution hubs close to key infrastructure and population centres will match member needs for strong, sustainable long-term returns.”
The sale was introduced by Neil Murray, Rebecca Ngan and Dwight Hillier of Colliers’ strategic advisory team and facilitated by Colliers’ Michael Crombie, Gavin Bishop, Trent Gallagher, and Sean Thomson.
Crombie said the international expressions of interest generated domestic and offshore attention and, left in excess of $8 billion of unsatisfied capital left to place within the Australia industrial sector.
“The campaign attracted insatiable interest from institutional investors and developers recognising the scarcity of replaceable opportunities of genuine scale to redevelop within the tightly held Mascot precinct.”
Large-scale logistics and warehousing portfolio transactions have been a feature of the Australian market in 2021. In addition to the Moorebank deal, the country’s largest-ever property transaction was landed earlier in the year with the $3.8 billion acquisition of Blackston’s Milestone logistics portfolio by ESR and GIC.
Blackstone shortly afterwards offloaded a 90% stake in the Fife industrial portfolio for about $850 million to PGIM Real Estate and Manulife, while GPT is in due diligence to buy Ascot Capital’s $800 million portfolio.
RCA’s head of analytics Pacific Benjamin Martin Henry revealed in Australian Property Journal’s Talking Property podcast that for the first time in history, industrial demand has outstripped retail and offices combined.
