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Centuria Industrial REIT (ASX:CIP) has acquired a three-asset industrial portfolio of cold storage facilities, worth a collective $171.1 million1, providing an average initial yield of 5.62%.
To partially fund the portfolio purchase, CIP also announced a $125 million fully underwritten institutional placement.
The east coast, cold storage portfolio is 100% occupied by national and international operators and provides an average 6.4 year WALE. Following the portfolio acquisition, CIP’s income derived from non-discretionary, food distribution and cold store facilities increases to 33%2.
On completion of the acquisitions, CIP’s market capitalisation will increase to $1.7 billion. CIP has upgraded its FY21 Funds from Operations (FFO) guidance from 17.4 cents per unit to no less than 17.5 cents per unit and reaffirmed its distribution per unit (DPU) guidance of 17.0 cents.
Jesse Curtis, CIP Fund Manager, commented, “The cold storage portfolio acquisition leverages a key growth focus for CIP to acquire assets supporting non-discretionary, food and pharmaceutical distribution and refrigerated logistics industries. These industries are experiencing strong tailwinds underpinned by a rapid increase in online food sales creating favourable supply and demand dynamics.
“The three assets are strategically located within core industrial markets of Sydney, Melbourne and Brisbane, with excellent connectivity to distribution networks. They provide secure income streams supported by high-quality tenant customers.”
The 25,418 sqm Girraween (NSW) cold storage facility was acquired for $73.1 million. Located at 67-69 Mandoon Road, it is just six kilometres from Parramatta CBD within a key in-fill industrial market. The sale-and-leaseback agreement was secured on a seven-year triple-net lease to a wholesale food distributor.
Both cold storage facilities at 45 Fulton Drive, Derrimut (VIC) and 60-80 Southlink Street, Parkinson (QLD), were secured for $49 million each. The two assets, totalling c.20,000sqm, are leased to leading national refrigerated transport and distribution provider, Rand Transport. Derrimut has a 5.8 year WALE and Parkinson, a 6.1 year WALE.
CIP’s portfolio now expands to 59 high quality assets worth $2.3 billion with occupancy of 96.8% and a 9.7 year WALE. The cold storage portfolio acquisition reaffirms CIP’s position as Australia’s largest listed pure play industrial and logistics REIT.
Ross Lees, Centuria Head of Funds Management, said, “Throughout the 2020 calendar year, there has been a considerable consumer shift towards non-discretionary online retailing due to the impact of COVID-19. Adding to this is the unmet demand for cold storage facilities from the grocery and pharmaceutical sectors. These metrics have underpinned Centuria’s rapid portfolio expansion within the industrial and logistics sector.
“Within the past 12 months, Centuria’s funds have acquired approximately $1.1 billion in industrial assets. It has been a resilient sector and one we believe will continue growing in the near future.”
In addition to the $171 million cold storage portfolio, Centuria acquired the $236 million Arnott’s portfolio in December 2019, the $417 million Telstra Data Centre (Clayton, VIC) in August 2020, a $106 million five asset portfolio throughout August to October 2020 and the NZ$179 million (c.AU$167 million) Visy Glass manufacturing facility in October 2020.
The cold storage portfolio acquisition will be partially funded by a fully underwritten institutional placement and CIP’s existing debt facility. New units issued under the placement will rank equally with existing CIP units from the date of issue and will be entitled to the distribution for the quarter ending 31 December 2020.