Centuria captures mum & dad appetite for industrial investments
Secures $50 million worth of industrial assets for unlisted diversified fund
- $38 million warehouse development, Direk, SA, pre-let on 15 year lease1
- $12 million maintenance depot, Malaga, WA, 100% leased, 4.3 year WALE2
- First industrial assets for unlisted, open-ended Centuria Diversified Property Fund (CDPF)
- Builds on Centuria’s strong $4.8 billion3 industrial platform, meets retail investor appetite
To capitalise on retail investor appetite for industrial real estate, the unlisted, open-ended Centuria Diversified Property Fund (CDPF) has secured two industrial facilities worth $50 million on a 11.45 year Weighted Average Lease Expiry (WALE)4, underpinned by blue-chip national tenants.
CDPF secured a 5.4 ha greenfield site at 36 Caribou Drive, Direk, SA5 and will fund through the development of a c.22,000sqm warehouse with an end value of $38.25 million. The development is pre-let to one of Australia’s largest privately owned steel distributors and manufacturers, Apex Steel Suppliers, on a 15 year lease1. Completion is expected in January 2023.
Additionally, the Fund has settled the acquisition of an $11.75 million purpose built vehicle maintenance depot at 171 Camboon Road in Malaga, Perth, fully leased to a wholly-owned subsidiary of ASX-100 listed Cleanaway Waste Management Ltd on a 4.3 year term2.
These are the first industrial acquisitions for the five year old diversified fund, building on Centuria’s existing $4.8 billion3 industrial portfolio and strong industrial management capabilities.
The acquisitions increase CDPF’s industrial asset weighting to 21.5% while extending portfolio WALE from 3.65 years to 5.17 years and portfolio occupancy to 98.9%.
Jason Huljich, Centuria Joint CEO, said “There is strong appetite from retail investors to secure quality industrial logistics assets that deliver compelling yields, especially in this low interest rate environment.
“We have seen this for our unlisted, fixed-term Centuria Industrial Income Fund No 1 (CIIF1), which was oversubscribed in February with more than $40 million raised predominately from mum and dad investors, and in New Zealand we raised approximately $110 million for the single asset Visy glass manufacturing facility fund.
“These market conditions often attract the interest of offshore institutions, which is why we aim to secure Australian assets for Aussie retail investors through our unlisted fund offerings.”
Since its inception in June 2016, the Fund has delivered a 12.96%6 per annum total net return. The Fund’s portfolio now includes six direct assets, nine indirect investments via Centuria’s unlisted funds, investment in listed AREITs, and cash-like products, collectively worth $242 million7.
Ross Lees, Centuria Head of Funds Management, added “The industrial acquisitions are in line with CDPF’s strategy to further diversify the Fund’s direct property investments and supports investors’ appetite for this asset class. CDPF is committed to generating quality income streams underpinned by strong management capabilities across a portfolio of quality property assets.”
The Direk development will provide a 21,160sqm warehouse, 820sqm office space, heavy duty hardstand, full drive around B-Double truck access, and multiple on-grade roller doors with canopies for undercover loading. It is custom-built for Apex and will serve as its new steel storage and distribution facility. The 40% site coverage also enables future expansion.
The SA development is within the same estate as Centuria Industrial REIT’s 9-13 Caribou Drive, leased to Fisher & Paykel. Other neighbouring occupiers include Rand, Lindsay Transport, Cahill Transport, Hentschke Transport, SCF Containers and Nick Scali.
Direk is one of Adelaide’s major northern industrial precincts, benefiting from close proximity to Highway 1 and the recently completed Northern Connector, which improves connectivity to the broader major transport network.
The Malaga asset is a purpose built vehicle maintenance depot, strategically located within the northern Perth industrial precinct, benefiting from close proximity to the Tonkin and Reid Highways. The property includes a 3,228sqm multi-level office, workshop with canopies, and truck wash facilities. The property has a low 18% site coverage within 1.8 ha, providing a value-add opportunity to redevelop and increase its potential in the future.
The WA asset has been occupied by Transpacific Cleanaway Pty Ltd, a wholly owned subsidiary of Cleanaway Waste Management, since the 1980s.
CDPF is currently raising capital to fund the acquisition with a target raise of approximately $30 million.
CDPF is a Significant Investor Visa compliant fund.
1. As at January 2023, upon development completion
2. As at 1 July 2021
3. Includes industrial assets throughout Australia and New Zealand as at June 2021, including exchanged and owned assets.
4. WALE by weighted gross income as at September 2021, when the Direk asset is expected to settle.
5. Settlement of the contract for the land purchase is conditional upon receipt of satisfactory DA approval within a prescribed timeframe
6. As at 30 June 2021. Past performance is not a reliable indicator of future performance.
7. CDPF’s portfolio assets under management of $242.1 million includes the value of the completed Direk development. Prior to the industrial acquisitions, the Fund’s AUM was $203.1 million.