Investors are swooping on industrial properties in sale and leaseback arrangements, with close to $81 million of assets on the market across the booming western Sydney precinct.
Private group Leda Holdings has emerged as the seller of two Western Sydney industrial and logistics assets for a combined total of $46.05 million. They are located at 5 Williamson Road, Ingleburn, and 8 Hexham Place, Wetherill Park.
EG Funds, an active fund manager, bought the 18,514 square metre Ingleburn property for $38.2 million on a yield of 5.42 per cent. The site comprises three separate buildings and is anchored by Austcor Packaging.
A private investor snapped up the 3217 sq m asset at Wetherill Park for $7.85 million on a yield of 5.27 per cent, which is leased to Angrow Pty Ltd.
With the rise in online shopping and need for increased data storage as people work from home due to the global pandemic, demand for industrial property is on a strong upward trajectory.
The industrial and logistics investments market has seen more than $3.3 billion trading so far in 2020, says Luke Crawford, associate director, research at Colliers International.
“While not immune to recent economic uncertainty, the Australian industrial and logistics sector has so far proven to be resilient, underpinned by the exponential growth of e-commerce as well as the allocation of capital away from other sectors,” Mr Crawford said.
Gavin Bishop and Sean Thomson of Colliers International and Elijah Shakir, Jason Edge and Tom Rourke of CBRE sold the two properties and said given the constraint supply of assets to acquire nationally across 2020, the sales campaign gained immediate market attention from a diverse range of investors.
Mr Bishop said bidding for the properties went over three rounds highlighting the depth of demand for well-located industrial investments of scale, underpinned by secure tenant covenants.
Mr Edge said Sydney remains a strong focus for both private and institution industrial investors.
Buyers also have the chance to capitalise on the “Last Mile” e-commerce demand with an industrial development site being offered at 132 McCredie Road, Smithfield, by BP Australia.
JLL’s John Macree and Roger Miller have been appointed to sell the site and said the industrial sector has proven to be the most resilient during the COVID-19 pandemic.
The leaseback structure at the Smithfield site generates about $1 million per annum with Castrol Australia, a division of BP, as the tenant. The agents declined to comment on the sale price, but similar assets have changed hands at around the $35 million.
“Given the continuing low interest rate environment accompanied by the government’s unprecedented investment in infrastructure throughout the coming years, the property presents an outstanding opportunity to secure a future logistics estate with strong rental and capital growth prospects in the future,” Mr Macree said.
Mr Miller added the higher e-commerce penetration rate will see an evolution in consumer expectations and a higher demand for industrial warehouse and storage properties.
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