Blackstone buys four industrial properties for $126m
Global investment giant Blackstone has increased its exposure to the Australian property market with the acquisition of four industrial assets for $126 million from two Charter Hall funds.
Under the deal, the Charter Hall Prime Industrial Fund (CPIF) and the Core Logistics Partnership (CLP) have sold the assets and will use the cash raised to boot their respective development projects.
Three of the properties are owned by CPIF and one asset by CLP. The price reflects a premium above book value and an equated capitalisation rate of 6.98 per cent.
The industrial and logistics sector has been a key growth sector for Charter Hall over the past five years, and is now Australia’s second-largest industrial platform, with a $4.7 billion portfolio in key Australian markets.
For Blackstone, the assets will boost its Australian industrial presence, an area of growth thanks to the rise in e-commerce, which needs warehouses to store and distribute goods bought online.
Separately, Blackstone is selling its $3.5 billion Australian retail platform, with Charter Hall, AMP Capital and Lendlease said to be among interested parties.
The pending arrival of Amazon in Australia has also thrown the spotlight on the industrial property sector. Amazon has appointed agents CBRE to source assets for what it calls fulfilment centres.
Charter Hall’s group executive industrial, Paul Ford, said as an investment fund manager performance was everything and this transaction demonstrated the group’s focus on being an active seller in order to further improve portfolio quality and “enhance returns for our capital partners”.
“The strong demand from existing customers looking to grow within the portfolio and new customers looking to partner with us across the portfolio is allowing us to redirect capital to superior risk-adjusted returns by delivering on our de-risked development pipeline with high-quality tenant precommitments,” he said.
According to Sass J-Baleh, the research manager at Colliers International, in a market fuelled by historically low interest rates, investors have looked to the Australian industrial property sector for investment opportunities.
“In 2016 just over $4.5 billion in industrial sales occurred nationally, slightly above the five-year average of $4.3 billion,” Ms J-Baleh said.
“The majority of market transactions were from domestic purchasers, about 60 per cent, and the remainder from offshore investors. Domestically, institutions such as Blackstone, Charter Hall, and AMP have been actively pursuing industrial opportunities. Last half of 2016, Blackstone purchased industrial portfolios worth around $1.5 billion.”
Ms J-Baleh said this trend was set to continue with strong demand from offshore investors, particularly Asian-based investors and local funds based in Australia.
Mr Ford said the sale of the smaller non-core assets to Blackstone, “will improve the quality and size of underlying assets with the capital redeployed into strategic acquisitions and the development pipeline, which has the capacity to provide the group’s industrial sector a further $1.3 billion funds under management or 850,000 square metres of gross lettable area”.
The divestment portfolio comprises 175 Eagle Farm Road, Pinkenba, Queensland; 140-160 Robinson Road, Geebung, Queensland; 2-10 Interchange Drive, Laverton North, Victoria, and 5-29 Frederick Road, Tottenham, Victoria.
Richard Mason, CPIF fund manager, said the sale allowed CPIF to reinvest the net proceeds into an increasing Sydney development pipeline, which comprises the Chullora Logistics Park, the M5/M7 Logistics Park at Prestons and the Huntingwood Logistics Park, together with the Motorway Industrial Park at Berrinba.
