Centuria Industrial REIT (CIP) has taken a big bite out of Arnott’s property portfolio, after agreeing to acquire the iconic biscuit maker’s Brisbane and Adelaide factories for $236.2 million in sale-and-leaseback deals.
The deals, struck with Arnott’s private equity owner KKR on a yield of 5.9 per cent, will lift the value of the country’s largest pure-play industrial trust’s portfolio to more than $1.5 billion. CIP will undertake a $154 million fully underwritten institutional equity raising to part fund the deal.
Ross Lees, head of funds management at Centuria Capital, said appetite from investors for industrial assets was “pretty strong”.
“Industrial is the most preferable sector in listed real estate,” he told The Australian Financial Review.
He described the acquisition of the 44,785-square-metre Arnott’s Brisbane facility for $211.8 million on a yield of 5.8 per cent as a “compelling opportunity that would reshape the portfolio”.
Offered with a 30-year lease to Arnott’s, the deal lifts a key metric of the CIP portfolio, the weighted average lease expiry, to 7.2 years from 4.4 years.
The smaller 23,593-square-metre Adelaide factory in the suburb of Marleston was acquired for $24.4 million on an initial yield of 7.4 per cent with a 12-year lease.
KKR put the portfolio, including its key factory in Sydney, up for sale in September after buying Arnott’s for $3.2 million in August. UBS and CBRE were appointed to steer the campaign.
It is understood CIP is not in the running for the most valuable asset in the Arnott’s bakehouse, its 63,000-square-metre Sydney factory in Huntingwood near Blacktown.
This could be worth well in excess of $500 million given reports the entire portfolio was being offered for $800 million.
Among those thought to be in the running for the Sydney asset are the Charter Hall Long WALE REIT, acquisitive fund manager and developer LOGOS as well as offshore groups from Hong Kong and Korea.
CIP reaffirmed its previous guidance of 19.6c to 19.9c per unit and a distribution of 18.7c per unit.
It also announced that nine properties in its existing 46-property-strong portfolio had been independently revalued as of December 31 resulting in a $19 million or 9.5 per cent increase on prior valuations.
As a result of these revaluations, the portfolio’s weight average capitalisation rate firmed six basis points to 6.41 per cent prior to the acquisitions.
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