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Centuria secures $18m Wetherill Park industrial facility
Second asset for wholesale unlisted Centuria Select Opportunities Fund
- Off-market acquisition provides value-add opportunity to capitalise on near term rent reversion opportunity
- Currently under-rented in a tightly held market, 0.9% vacancy1
Australasian real estate funds manager, Centuria Capital Group (ASX:CNI or “Centuria”), has secured a second asset for its wholesale unlisted fund Centuria Select Opportunities Fund (CSOF or “Fund”) with the acquisition of an $18 million warehouse facility in Sydney’s core central western infill industrial market of Wetherill Park.
Located at 26 Redfern Street, the asset provides two freestanding industrial units totalling c.4,530sqm with a 46% site coverage.
Significantly, the asset provides a value-add opportunity to capitalise on its remaining lease term in the tightly held west Sydney industrial market where vacancy has reached a low 0.9%1, demonstrating high demand for infill industrial assets which is driving strong rental growth.
Jesse Curtis, Centuria Head of Funds Management, said, “CSOF is designed to execute on a counter-cyclical strategy, capitalising on market opportunities to extract outsized returns for investors. This Wetherill Park property provides an opportunity to lean on Centuria’s strong in-house asset management capabilities to achieve compelling re-leasing spreads and rental income in line with the wider infill central western Sydney industrial market. We believe this investment will further contribute to the Fund’s targeted investor returns.”
CSOF has raised $50 million of equity from its Australian wholesale investor network and aims to deploy its capital across the coming 15-month period2, targeting a 15% Internal Rate of Return (IRR)3 across a five-year term. Centuria is co-investing alongside its wholesale investors, indicating its belief in the Fund’s high conviction investment strategy.
The Fund will generate returns by improving the functionality of the warehouses and undertake strategic leasing to access stronger rental streams from the asset.
Both industrial units are c.2,265sqm with 150sqm office spaces and benefit from multiple on-grade roller doors and one sunken loading dock, high clearances, and substantial power capacity. Warehouse 1 includes a 3.2-tonne gantry crane and Warehouse 2 benefits from a surplus hardstand area for external storage. The warehouses are currently leased to different tenants.
26 Redfern Street is located 27kms west of the Sydney CBD and 8kms southwest of the Paramatta CBD. It is positioned within proximity to major arterial roads including the M7 motorway, M4 motorway, the Cumberland Highway and The Horsley Drive, providing superior connectivity and accessibility to the Greater Sydney region.
The asset provides access to a substantial population of 1.4 million households within a 60-minute drive4.
This acquisition builds on the Fund’s seed asset, a $20.6 million industrial logistics facility in southeast Melbourne’s industrial heartland of Keysborough.
Across Centuria’s listed and unlisted funds, it manages 27 industrial properties worth c.$1.3billion5 within western Sydney and, compared to this c.410,000sqm portfolio, Centuria believes the current Redfern Street warehouses are significantly under-rented.
Centuria is an ASX-200 listed real estate manager with a track record exceeding 25 years and manages a $6.0billion industrial platform5.
The property was sold via Cushman & Wakefield’s Carl Pearce, Nick Brooks and Alistar Siokos.
1. Source: Cushman & Wakefield, Sydney West submarket Q1 2024
2. From January 2024
3. Internal Rate of Return (IRR) net of fees. The rate specified is a target only and is not a forecast. This target is the total return outcome of the Fund at the end of the term of the Fund. The IRR target will be a composite return based upon the returns of the underlying investments. The achievement of this target is subject to best endeavours and is not a guarantee of future performance. An investment in the Fund is subject to risks, as detailed in the Information Memorandum of the Fund.
4. Source: SA1 Data
5. As at 31 December 2023