
Centuria inks $171m warehouse deal
Centuria Industrial REIT has undertaken a $125 million capital raising to partially fund three cold storage industrial facilities it has acquired across the country for a total of $171.1 million.
The portfolio, which is 100 per cent occupied and has a weighted average lease expiry of 6.4 years, comprises three warehouses – a 25,400 sq m facility at 67-69 Mandoon Road in Girraween, 30 kilometres west of the Sydney CBD, an 11,000 sq m property at 45 Fulton Drive, Derrimut, in Melbourne’s west and an 8400 sq mproperty at 60-80 Southlink Street in Parkinson, an outer southern suburb of Brisbane.
The price represents an average initial yield of 5.62 per cent.
The Melbourne and Brisbane assets were sold by German real estate investment manager DWS and are leased to Rand Transport. The Sydney facility was sold by one of the largest food service distributors in Australia, Bidfood, in a sale and leaseback deal.
Centuria Industrial REIT (CIP) fund manager Jesse Curtis said the three assets were strategically located in the core industrial markets of Sydney, Melbourne and Brisbane with good connectivity to distribution networks.
“The east coast, cold storage portfolio acquisition leverages a key growth thematic for CIP in the non-discretionary, food and pharmaceutical distribution and refrigerated logistics industries,” Mr Curtis said.
“These industries are experiencing strong tailwinds underpinned by a rapid increase in online food sales creating favourable supply and demand dynamics.”
Mr Curtis added the three new assets provided secure income streams supported by leading national and international operators.
In order to partially fund the acquisition, CIP is seeking to raise about $125 million from institutional investors at an issue price of $3.06, which represents a 2.9 per cent discount to the last close price of $3.15 per share on Monday.
The placement is being fully underwritten by investment banks J.P. Morgan and Moelis.
In order to fund the balance of the aquisition, CIP will draw down $58.7 million in debt.
JLL’s capital markets industrial and logistics team, Tony Iuliano Adrian Rowse, Roger Miller, Greg Pike and Gary Hyland, negotiated the sale.
Mr Iuliano said investment appetite for the industrial sector had been consistently strong over 2020, with upward pressure on pricing accelerating relative to commercial office markets.
“Global capital will continue to be attracted to Australia’s industrial investment markets due to the country’s ‘safe haven’ status, relatively resilient economy, dynamic industries and high innovation and skills,” Mr Iuliano said.
“With manufacturing accounting for more than 20 per cent of gross take-up of industrial space in Melbourne and Sydney over the past 10 years, the announcement in the Federal Budget of $1.5 billion Modern Manufacturing Strategy will add to growth of industrial and logistics space in both states,” he added.
According to recent research by JLL, the eastern seaboard’s average industrial and logistics vacancy is at relatively low levels of around 5 per cent with the the cold storage sector even lower with vacancy close to 0 per cent across the country.