Centuria secures $36m Mackay industrial asset
Central Queensland acquisition capitalises on burgeoning regional logistics
- Purpose built distribution centre, 100% leased to Wesfarmers’ subsidiary, Blackwoods, 6.1 year WALE1
- Acquired on a 7.24% equivalent market yield
- Secured for a single asset, closed-ended fund, five year term, 6.50% p.a.2 starting distribution
- Follows success of Centuria Industrial Income Fund No.1.
Leading Australasian real estate manager, Centuria Capital Group (ASX:CNI or “Centuria”), continues to capitalise on the strong industrial market tailwinds with the acquisition of a $35.5 million, high quality distribution centre at 69-79 Diesel Drive, Paget, Mackay Qld.
The acquisition, which was secured on a 7.24% equivalent market yield, will be the underlying property for Centuria’s new single asset, closed ended unlisted real estate fund, Centuria Industrial Income Fund No. 2 (CIIF2 or “Fund”).
The purpose-built, 13,843sqm industrial facility is 100% leased to Wesfarmers’ safety supplies subsidiary, Blackwoods, on a 6.1 year WALE1 with annual CPI-linked rent reviews3.
Jason Huljich, Centuria Joint CEO said, “This Central Queensland acquisition captures the strong tailwinds of the domestic industrial market while harnessing the sector’s robust rental growth, driven by low vacancy rates and constrained supply. Furthermore, Mackay is strategically positioned to service a significant North Queensland catchment area including Cairns, Townsville and Mount Isa.
“Centuria continues to seek out strategically located, fit-for-purpose industrial assets that are underpinned by quality tenants on favourable leasing covenants. The Mackay property ticks all these boxes while also providing a value-add development opportunity, which could potentially extract further returns for our investors.”
The asset has a low (46%) site coverage4 providing potential expansion opportunities.
The property benefits from dual road frontage and a near level topography. It comprises a high quality distribution centre including showroom, office and warehousing with 11-13 metre clearance, full height racking system, mezzanine floor, pick and pack floor area, dispatch and receipt areas each via nine roller doors with awning cover. A small manufacturing facility on land to the rear is subleased to another Wesfarmers subsidiary, Coregas.
Paget is the main industrial and distribution centre for the Mackay region being in proximity to the Mackay Airport, the Mackay rail intermodal terminal, Port of Mackay and the Bruce Highway, which connects North Queensland to Southeast Queensland.
CIIF2 will provide an initial five year term, monthly distributions5 and has a forecast starting distribution yield of 6.50% p.a. in FY23, rising to 6.75% p.a.2 in FY24. It has a minimum entry investment of $50,000. Centuria will seek to raise $22.4 million to launch the Fund. Applications for units in CIIF2 must be made pursuant to a PDS which will be made available on or around 14 November 200 on Centuria’s website at https://centuria.com.au/ciif2.
“Centuria benefits from approximately two-thirds of its platform being weighted towards unlisted real estate funds. The unique composition appeals to various capital sources and can accommodate a range of properties across the asset classes we are presently focused on growing within. We continue to see attractive themes within the industrial sector and are pleased to be delivering this new investment opportunity for our unlisted investors,” Mr Huljich concluded.
In March 2021, Centuria completed the Centuria Industrial Income Fund No.1 (CIIF1), raising $40 million for the acquisition of four assets, collectively worth $89 million as at 30 June 2022.
The Paget acquisition follows Centuria’s recent 50% investment in the $223 million Allendale Square office building in Perth, c.$169 million invested across five loan facilities by Centuria Bass Credit, and c.$42 million worth of acquisitions by the Centuria Healthcare Property Fund (CHPF).
Colliers International’s Simon Beirne acted on behalf of the Paget vendor.
1. Weighted average lease expiry (by gross income) including vendor rental guarantees and as at 1 December 2022
2. The initial distribution rate is the distribution budgeted to be paid for the first month post the launch of the Fund in December 2022, annualised (assuming equal monthly distributions). Actual distributions for subsequent months will be updated on Centuria’s website. Forecast returns are predictive in nature and are calculated in accordance with a number of underlying assumptions to be set out in the PDS. Returns may be affected by incorrect assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. The payment of distributions is not guaranteed.
3. Consumer Price Index-linked cap and collar rent reviews with at a minimum 3%p.a. and maximum of 3.5%p.a.
4. Total site area comprises 30,100sqm
5. Centuria Property Funds Limited intends to pay monthly distributions and will be subject to the terms set out in the PDS
A warehouse located within a key southeast Brisbane industrial precinct at Willawong has been sold at a premium to its prior book value.
Centuria has achieved above prior book value sales premiums for two urban assets in Sydney and the Gold Coast, respectively, which reflect strong demand for well located commercial real estate benefitting from urban regeneration and in close proximity to housing, schools and universities.