The directors of major food products developer and manufacturer Flavour Makers are hoping for a $30 million pay day after listing two Melbourne warehouses for sale amid a boom in demand for agri-logistics assets.
More than $1.5 billion worth of these specialist assets have changed hands over the past two years according to CBRE, as investors seek to buy into a key part of the agricultural supply plain underpinned by the $60 billion of farm goods produced in Australia each year.
Agri-logistics refers to the specialist warehousing and logistics used in the processing, storage and delivery of food and other goods that form a key part of the agricultural products supply chain from the farmgate to supermarkets, restaurants and retail stores.
The two Flavour Maker warehouses at 91-97 Woodlands Drive and 223 Governor Road in Braeside in Melbourne’s south east are being sold by interests associated with the company’s founder and group CEO Adrian Cester and his business partner and fellow director Michael Foran.
Both warehouses are leased to Flavour Makers for 12 years and bring in $1.83 million in annual rental income.
Mr Cester founded Flavour Makers out of his garage in 1992 with Mr Foran joining the business two years later. The company develops and manufactures food products like chutneys and noodles and supplies them to the likes of Coles and Woolworths in Australia and British supermarket chains Tesco and Morrisons among other overseas groups.
Property records show the Governor Road warehouse last sold for $8.8 million in May 2011 and the Woodlands Drive warehouse for $4.1 million in September 2011.
CBRE director of agri-logistics, Stephen Caffery, said the sector was attracting greater institutional investment, underpinned by the strength of Australia’s industrial & logistics and agricultural markets.
Recent major transactions in the sector include Charter Hall’s $207m acquisition of the Ingham’s portfolio, comprising 27 poultry supply chain assets in December 2018, and Qualitas’ $388 million sale and leaseback of Allied Pinnacle’s portfolio of 10 grain handling and food processing facilities in March 2018.
“On the back of a buoyant industrial & logistics sector, recent free trade agreements, Asia’s investment appetite and capacity for Australia’s agriculture industry to produce high value food and fibre products, there has been a sharp upturn in investment in the sector,” Mr Caffery said.
“Agri-logistics has all the ingredients to become the standout investment class in Australia over the next decade. The sector is the backbone that supports Australia’s $60 billion farm gate production industry each year.
“All of Australia’s agricultural products, at some point, will need to be processed, value-added, stored and transported for either domestic consumption or export markets. Investing in these supply chains represents an enormous opportunity for investors looking for long term secure cashflows in assets that are defensive in economic downturns.”
CBRE’s Ben Hegerty said the Flavour Makers facilities offered a complete end-to-end food development and manufacturing solution with state-of-the-art dry blending facility, liquid processing plant and a meals plant capable of processing both liquid and solid ingredients.
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