CIP secures $132m urban industrial portfolio
- $132m portfolio acquisition of six high-quality assets in urban, infill markets
- Includes a multi-unit Campbellfield development; $104m on-completion value; five-star Green Star target
- Three acquisitions adjoin existing CIP assets, consolidating larger sites
- Capitalise on strong leasing conditions and low vacancy rates; 100% eastern seaboard weighted
Australia’s largest listed pure-play industrial REIT, Centuria Industrial REIT (ASX: CIP), has kicked off the 2022 calendar year with the acquisition of six strategic urban infill industrial assets, with a combined end value of $132.4 million.
The assets, located across the strong performing eastern seaboard markets, capitalise on land constrained, urban infill markets that are in high demand from ecommerce operators seeking close proximity to densely populated areas to improve supply chain efficiencies.
|Properties||State||Value||Initial yield||Capitalisation Rate||GLA1(sqm)||WALE1 (yrs)||Occupancy1|
|90-118 Bolinda Road Campbellfield2||VIC||$37.7m||4.5%||4.50%||8,210||0.7||100%|
|159-169 Studley Court, Derrimut||VIC||$17.1m||4.3%||4.25%||7,725||4.8||100%|
|43-49 Wharf Road, Port Melbourne||VIC||$11.5m||3.0%||4.25%||2,387||1.7||100%|
|8 Hexham Place, Wetherill Park NSW||NSW||$12.2m||3.6%||3.63%||3,217||1.7||100%|
|590 Heatherton Road, Clayton South||VIC||$27.5m||4.0%||4.00%||9,575||10.0||100%|
|5/243 Bradman Street, Acacia Ridge||QLD||$26.5m||3.9%||4.25%||9,897||7.8||100%|
|Total / weighted average||$132.4m||4.0%||4.21%||41,011||4.7||100%|
Among the acquisitions is an eight hectare site in the north Melbourne industrial market of Campbellfield, which has a short term lease. Upon lease expiration, a brand new, sustainable 44,000sqm industrial estate will be delivered.
The site, located at 90-118 Bolinda Road, Campbellfield, was secured for $37.7 million and will be transformed into a five-unit industrial estate with estimated on-completion value of $104.1 million. The site will be developed in partnership with Cadence Property Group who also partnered with CIP on the $89 million Southside Industrial Estate in Dandenong, which is currently under development.
Jesse Curtis, CIP Fund Manager and Centuria’s Head of Industrial said, “The Campbellfield site provides a rare, value-add opportunity to deliver a much needed new and sustainable multi-unit industrial estate. With tenancies ranging from 3,200sqm to 20,000sqm, it caters to the most active leasing size range in the market. The North Melbourne industrial market has vacancy of less than 2% and is attracting strong interest from high quality tenant customers. This backdrop gives us confidence to deliver state of the art, sustainable industrial facilities.”
Charlie Buxton, Cadence Property Group Managing Director, added, “We are excited to be partnering with CIP again to deliver another A-grade infill logistics park, this time in Melbourne’s north.
“Our experience to date, in other infill markets, is that there is a real lack of modern logistics accommodation and that the product is well sought after by tenants wanting to remain in infill locations. We expect this development to target a similar demand profile.”
Construction is expected to commence in 2023 with practical completion expected in 2024. The estate will target a Green Building Council of Australia Five Star Green Star rating.
CIP’s other recent acquisitions include sites in Derrimut, Port Melbourne and Wetherill Park, which adjoin existing CIP assets. The Acacia Ridge and Clayton South acquisitions build further scale in CIP’s sub-portfolios in the infill markets of south Brisbane and southeast Melbourne, respectively.
Mr Curtis, continued, “One of CIP’s strategic focuses is to provide its investors with exposure to urban infill industrial locations that cater to last-mile, ecommerce operators. The urban infill locations of these eastern seaboard acquisitions provide a favourable leasing outlook for rental growth, underpinned by near zero vacancy, buoyant tenant demand and limited land supply. These conditions provide opportunities to extract outsized returns from the assets.
“These six acquisitions mark a strong start to 2022 and continue to demonstrate CIP’s management capability to source and execute on strategic acquisitions. The acquisitions adjoining existing CIP-owned assets create future development sites of scale in desirable and land-constrained urban infill markets.”
The Derrimut acquisition includes two modern industrial facilities and adjoins CIP’s existing asset at 179 Studley Court, creating a 4.0ha continuous landholding in inner west Melbourne. The acquisition will be the ninth asset in CIP’s Derrimut sub-market, collectively worth $229 million.
The Port Melbourne acquisition adjoins CIP’s recently acquired 51-65 Wharf Road and creates a 1.0ha landholding in one of Melbourne’s most tightly held industrial markets. Additionally, the site provides a short Weighted Average Lease Expiry (WALE) and is considered under rented, providing near term value-add upside.
The Wetherill Park acquisition adjoins CIP’s recently acquired 160 Newton Road and 164-166 Newton Road assets, together creating a 5.3ha landholding in a land constrained and highly sought after central western Sydney industrial market. The asset holds a short WALE and additionally provides near term value-add through positive rental reversion.
The Clayton South acquisition is leased to Canterbury Windows and Doors and builds on CIP’s southeast Melbourne portfolio which includes nine assets worth $866 million.
Finally, 5/243 Bradman Street is a high-quality modern industrial facility that sits within the Westridge Industrial Park in the urban infill market of Acacia Ridge in Brisbane’s south. The site is leased to a high-quality tenant in Lincoln Sentry. The asset is considered under-rented and provides opportunity to capture positive rental reversion in the short term.
The acquisitions increase CIP’s total portfolio to c.$4 billion and will be funded by new and existing debt facilities.
CBRE’s Jason Edge and Rory Hilton were the agents for the Campbellfield transaction; Jack Pershouse as well as Jason Edge facilitated the Wetherill Park transaction; and Stephen Adgemis, David Aiello and Ben Hegerty facilitated the Clayton South transaction.
Colliers International’s Jack Kelliher was the agent for the Port Melbourne transaction.
1. By income as at 31 December 2021
2. Acquisition metrics. On expiry of the current lease CIP will enter into a Development Management Agreement to deliver a c.44,000sqm unit estate with an end value of c.$104.1 million
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.