CIP cements $181m partnership with Morgan Stanley vehicle
Co-investment across existing CIP owned prime grade industrial assets
- c.50% divestment across eight existing CIP assets, reflect a 4.7% divestment yield
- Sale proceeds used to reduce debt and strengthen CIP’s balance sheet
- Demonstrates continued demand for high quality urban infill industrial assets benefiting from rental growth
- New industrial fund expands Centuria’s existing institutional partnership, further diversifies capital sources.
Centuria Industrial REIT (ASX:CIP), Australia’s largest listed pure-play industrial fund, has announced an industrial real estate partnership with an investment vehicle sponsored by Morgan Stanley Real Estate Investing (MSREI).
The partnership, known as the Centuria Prime Logistics Partnership (CPLP), will see the MSREI vehicle acquire a c.50% interest in eight CIP-owned prime grade industrial assets for a total price of $180.9 million1.
The transaction reflects a divestment yield of 4.7% and enables CIP to bolster its balance sheet by reducing debt and gearing while retaining exposure to these high quality strategic assets. This transaction builds on the divestment of 30 Clay Place, Eastern Creek NSW for $34.5 million with CIP having recycled $215.4 million worth of assets this financial year.
Jesse Curtis, CIP Fund Manager and Centuria Head of Industrial, said “The formation of this partnership demonstrates the resilience of CIP’s portfolio and the continued demand for high quality industrial assets within urban infill markets in which CIP operates. Establishment of this partnership, along with other recently completed divestments, demonstrates CIP’s ongoing commitment to prudent capital management and portfolio optimisation.”
CPLP properties have recently benefitted from value-add strategies and are underpinned by strong tenant covenants. CPLP will solely invest in industrial property, leveraging the sector’s strong tailwinds.
CPLP assets include:
- 8 Lexington Drive, Bella Vista NSW2
- 29 Glendenning Road, Glendenning NSW2
- 52-74 Quarry Road, Erskine Park NSW2
- 95-105 South Gippsland Hwy, Dandenong South VIC3
- 40 Scanlan Drive, Epping VIC3
- 69 Studley Court, Derrimut VIC3
- 42 Hoepner Road, Bundamba QLD3
- 1 Ashburn Road, Bundamba QLD3
Jason Huljich, Centuria Joint CEO, added, “This new partnership expands our existing relationship with MSREI, having established the pure play healthcare real estate vehicle, Centuria Prime Partnership, in May 2022. Our access to diverse property sectors continues to present opportunities for us to increase the institutional capital that is seeking to partner with Centuria.”
Entities associated with Centuria Capital Group will be appointed as the Trust Administrator, Property Manager and Development Manager allowing the partnership to continue to leverage Centuria’s deep capability in the logistics sector.
Settlement is expected in December 2022. CBRE acted on behalf of CIP for this transaction.
- Excluding transaction costs
- 49% ownership interest divested
- 50% ownership interest divested
Centuria Industrial REIT has announced positive year end FY23 results, driven by strong leasing activity – underpinned by an average 30% re-leasing spreads – coupled with a strong balance sheet, low debt gearing and diversified capital structure.
Centuria Industrial REIT (ASX:CIP), has reported year to date positive re-leasing spreads averaged 28%, which reflects continuous tenant demand and record low national vacancy for prime industrial facilities.