Centuria Industrial REIT secures $351m industrial portfolio
Eight high quality assets increase REIT’s asset value to $3.5 billion
- Eight off-market industrial acquisitions, blended 4.1% initial yield
- Anchor asset: $200m super-prime distribution centre, Fairfield NSW
- $151m across remaining seven; distribution centres, cold storage and transport logistics
- Urban infill metro markets – NSW, VIC, QLD & WA, tenants aligned to ecommerce sector
- 3.8 year WALE provides opportunity to achieve positive rent reversion, 100% occupancy
- CIP’s portfolio expands to 75 industrial properties worth $3.5bn
- Partially funded by a $300m fully underwritten institutional placement and non-underwritten UPP.
Centuria Industrial REIT (ASX:CIP) has secured a portfolio of eight high quality industrial properties within key urban infill markets throughout Sydney, Melbourne, Brisbane and Perth for a collective $351 million1, on a blended initial yield of 4.1%.
The acquisitions are anchored by a $200.2 million super-prime distribution centre, located at 56-88 Lisbon Street, Fairfield NSW, which was secured on a 3.6% initial yield. It is one of the largest industrial facilities within Sydney’s infill markets and only one of 10 large scale distributions centres within the M2, M7 & M5 orbital road network.
The remaining seven assets, worth $151.1 million are geographically diversified across NSW, VIC, QLD and WA. All assets are within key, urban infill markets and further diversified across the distribution centre, cold storage and transport logistics submarkets.
The acquisitions provide a blended Weighted Average Lease Expiry (WALE) of 3.8 years and all assets are 100% occupied.
Jesse Curtis, Centuria’s Head of Industrial and CIP Fund Manager, said, “These acquisitions are aligned with CIP’s portfolio strategy to acquire high-quality assets in urban infill locations where accelerating tenant demand is driven by ecommerce and last-mile users. The transactions further demonstrate our capability of sourcing off-market opportunities and curating a high-quality portfolio of industrial and logistics assets that have favourable pricing and superior quality to recent portfolio transactions in the market.
“We consider these assets to be under rented with low vacancy and limited new supply continuing to put upward pressure on rents in infill location. The blended 3.8 year WALE provides an opportunity to leverage Centuria’s strong in-house leasing capability to achieve positive rental reversion capturing outsized forecast rental growth. In addition, a number of the sites have surplus land, low site coverage and overlapping lease expiries, providing further value add potential through development, redevelopment or repositioning.”
The portfolio has a 67% weighting1 towards Sydney’s highly desirable central west market where vacancy is less than one per cent (1%) and, with limited land supply, provides strong rental growth opportunities.
|Properties||Sub-sector||State||Purchase price1||Initial yield||GLA2 (sqm)||WALE3 (yrs)||Occupancy|
|56-88 Lisbon Street, Fairfield||Distribution Centre||NSW||$200.2m||3.6%||60,223||4.1||100%|
|164-166 Newton Road, Wetherill Park||Distribution Centre||NSW||$36.8m||4.0%||11,883||3.5||100%|
|51-65 Wharf Road, Port Melbourne||Distribution Centre||VIC||$22.0m||3.7%||4,410||1.8||100%|
|346 Boundary Road, Derrimut||Transport Logistics||VIC||$11.9m||5.5%||4,214||3.0||100%|
|31-35 Hallam South Road, Hallam||Transport Logistics||VIC||$6.2m||5.8%||4,810||3.0||100%|
|51 Depot Street, Banyo||Cold Storage||QLD||$20.3m||4.7%||4,099||7.4||100%|
|31 Gravel Pit Road, Darra||Distribution Centre||QLD||$19.0m||5.0%||9,089||4.4||100%|
|48-54 Kewdale Road, Welshpool||Distribution Centre||WA||$35.1m||6.3%||20,349||2.9||100%|
|Total / weighted average||$351.3m||4.1%||119,078||3.8||100%|
The Wetherill Park acquisition adjoins CIP’s recently acquired 160 Newton Road also in Wetherill Park, providing a 4.6ha consolidated land holding. The Derrimut acquisition adds scale to CIP’s assets within the area creating a Derrimut sub-portfolio of seven assets worth $176 million.
Mr Curtis continued, “The Whetherill Park and Derrimut acquisitions align with a key CIP strategy to consolidate and grow land holdings within key urban infill markets. Additionally, all acquisitions are strategically located in core eastern seaboard industrial markets and further expand CIP’s exposure across key industrial sub-sectors including distribution centres, cold storage and transport logistics. These sub-sectors are experiencing strong tailwinds underpinned by accelerating consumer shift to online retail and growing need to onshore operations for supply chain resilience.”
The acquisitions expand CIP’s portfolio to 75 properties worth $3.5 billion4, reaffirming the REIT’s position as Australia’s largest listed pure-play industrial fund.
The REIT also has a further $100 million pipeline of acquisitions in due diligence.
The Wetherill Park, Banyo, Derrimut and Hallam acquisitions have already settled, and the remaining four assets are due to settle in the coming weeks.
To partially fund the Acquisitions5 and provide capacity to debt fund its pipeline of acquisitions in due diligence, CIP is undertaking a fully underwritten institutional placement to raise approximately $300 million along with a Unit Purchase Plan (UPP).
Following the deal, CIP reaffirms its Funds From Operations (FFO) guidance of no less than 18.1cents per unit (cpu), reflecting a 4.8% yield6, and its distribution guidance is also reaffirmed at 17.3cpu, reflecting a 4.6% yield5.
1. Excluding costs
2. On 100% basis
3. By gross income
4. Includes 95-105 South Gippsland Highway, Dandenong South VIC as if complete. Prior corresponding period reported 67 assets worth $3.1 billion as at 5 August 2021.
5. Includes proceeds used to repay debt associated with the settlement of Wetherill Park, Derrimut, Hallam and Banyo assets.
6. Yield is based on the issue price $3.85
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.