Centuria Industrial REIT secured four asset urban, infill portfolio
- $129.4m strategic urban, infill industrial portfolio; 84% weighting to NSW and VIC markets
- WALE duration provides value-add opportunities for positive rental reversion in supply constrained markets
- Capitalising on tenant demand within last-mile logistics precincts.
Australia’s largest listed pure-play industrial fund, Centuria Industrial REIT (ASX:CIP), today announced it has secured four high quality, eastern seaboard industrial facilities for a collective $129.4 million.
Eighty four per cent of the acquisitions were in the hotly contested Sydney and Melbourne markets increasing the REIT’s weighting to these high performing areas.
These strategic acquisitions increase CIP’s exposure within core, tightly held industrial markets, which are benefitting from strong rental growth on the back of rising tenant demand and low industrial vacancy rates, nationally.
The assets’ weighted average lease expiry (WALE) duration further provides CIP with an opportunity to capitalise on positive rental reversions from current under-renting while the prime location of the sites enable future value-add opportunities.
Jesse Curtis, CIP Fund Manager and Centuria’s Head of Industrial said, “The acquisitions lend themselves to last-mile logistics and distribution tenant customers and benefit from strong tailwinds across Australia’s industrial sector, particularly from the strong rise in eCommerce adoption and supply chain onshoring.
“These assets align with CIP’s strategy to acquire assets located in land constrained urban infill markets, where tenant demand currently outstrips forecast supply. The portfolio of assets provides a number of opportunities to actively manage the portfolio to add-value through capturing outsized rental growth from under-renting of the assets and potential development or activating higher and better use potential.”
Assets include a 22,439sqm, $70 million Super Prime-Grade transport logistics facility in Gregory Hills, NSW, fully leased to GMK Logistics on a 4.2 year WALE. The asset, located at 82 Rodeo Road, Gregory Hills, is within Sydney’s tightly held south-west growth corridor and increases CIP’s Sydney sub portfolio to over $1.1 billion having transacted on nearly $370 million this calendar year.
Mr Curtis continued, “Throughout the past 12 months, the prime Sydney industrial market has aligned itself more closely with global market yields due to eCommerce customer demand driving tenant requirements for warehousing within close proximity to a large population catchment. Gregory Hills is highly desirable given south-west Sydney’s strong population growth and excellent connectivity to major arterials roads, accessing a large distribution network.”
CIP also expanded its Derrimut landholdings with a 10,733sqm, $20.6 million industrial facility located at 30 Fulton Drive, VIC. It is fully leased to packaging manufacturer, Signode Australia Pty Ltd, on a two year WALE. With 40% site coverage, the asset provides an opportunity to add value through expansion of the building.
The 870 Lorimer Street, Port Melbourne VIC, acquisition was secured for $18 million and provides a 2,392sqm office/warehouse facility with a 2.5 year WALE. Port Melbourne is a key infill market with access to a large and growing population catchment suited to last mile users.
The last asset within the portfolio is a 10,962sqm, $20.8 million industrial estate located at 55 Musgrave Road, Cooper Plains QLD. It provides a 3.4 year WALE across four tenancies and is situated in a core logistics precinct.
Mr Curtis concluded, “This portfolio illustrates CIP’s ability to selectively secure assets that will deliver value to investors. The properties provide opportunities to leverage strong market rental growth from record low vacancy and provide future expansion through value-add development opportunities within areas of high tenant demand.”
|Properties||State||Purchase price1||Initial yield||Cap rate||GLA1(sqm)||WALE1 (yrs)||Occupancy|
|82 Rodeo Road, Gregory Hills||NSW||$70.0m||3.7%||3.88%||22,439||4.2||100%|
|30 Fulton Drive, Derrimut||VIC||$20.6m||4.9%||4.50%||10,733||2.0||100%|
|870 Lorimer Street, Port Melbourne||VIC||$18.0m||4.1%||4.00%||2,392||2.5||100%|
|55 Musgrave Road, Cooper Plains||QLD||$20.8m||4.1%||5.25%||10,962||3.4||89%|
|Total / weighted average||$129.4m||4.0%||4.22%||46,526||3.5||98%|
Colliers International’s Gavin Bishop, Sean Thompson and Fab Dalfonso were the agents for the Gregory Hills transaction. Simon Beirne and Levi Maxwell, also from Colliers, were appointed agents for Coppers Plains.
CBRE’s Ben Hegerty was the agent for the Derrimut transaction.
Dawkins Occhiuto’s Chris Jones and Walter Occhiuto were the agents for the Port Melbourne transaction.
[i] By Income as at 31 October 2021
Centuria Capital Group secures a $70.6 million industrial logistics facility in North Rocks, NSW, on behalf of US private investment firm, Starwood Capital’s, Last Mile Logistics Partnership (LMLP).
Centuria Capital Group has successfully exchanged conditional contracts to divest two adjoining industrial facilities located at 114 and 120 Old Pittwater Road, Brookvale NSW, which is anticipated to deliver a forecast 13.8% IRR to the assets’ closed-ended fund investors.