Morgan Stanley, Frasers back into $500m warehouse deal
The real estate arm of US investment giant Morgan Stanley is ramping up its push in Australia’s industrial market through a deal with property group Frasers for a $500 million portfolio along the east coast.
The transaction involves nine properties in Queensland, NSW and Victoria, and when added to a deal between the two major players earlier this year, will create a portfolio of around $1.4 billion when fully developed.
“It’s fantastic to see our capital partnership strategy gaining traction,” said Ian Barter, managing director for Frasers Property Industrial in Australia.
“This second venture with MSREI [Morgan Stanley Real Estate Investing] demonstrates the value of our build-to-core approach and our ability to deliver premium industrial assets, while accelerating development and optimising capital efficiency,”
The scale of the deal underlines the strength of appetite from foreign players for position in Australia’s tightly held industrial market, where vacancy rates are at around 3 per cent and rising in eastern seaboard capitals.
The industrial market has had a golden run with strong rental growth in recent years, despite the high interest rate setting which has weighed on the commercial property sector generally.
While some of the shine is wearing off with vacancy rates expected to ease somewhat as new supply is added to the sector, major institutions are still investing heavily.
Among recent examples of that interest, KKR and M&G Real Estate have formed separate partnerships on industrial portfolios with ASX-listed Stockland, while Canada’s QuadReal is backing a $1 billion partnership with GPT Group.
Meanwhile, Morgan Stanley’s real estate business has sold down some of its investments in the office sector in Australia, including a Sydney CBD tower – 10-20 Bond Street – held jointly with Mirvac, which was sold for $580 million last year.
Its latest swing into the industrial market deepens its tie-up here with Frasers, a Singapore-listed property powerhouse with a range of global real estate interests worth around $45 billion.
Under the deal – brokered by Cushman & Wakefield’s Tony Iuliano and Adrian Rowse and CBRE’s Chris O’Brien and Jason Edge – four assets will go into a new joint venture between Frasers and Morgan Stanley. The other five, including one under development, will be added to a venture the two players announced in April.
The nine-asset portfolio covers around 163,000 square metres and has profile tenants such as Goodyear, Asahi, and DHL. The ninth asset – a development site in Queensland – spans over 20 hectares and has the potential to accommodate up to five additional industrial properties with 140,000 square metres of space.
That would take the latest deal’s potential end value to around $800 million, in addition to the $600 million portfolio of warehouses held in the initial venture between Frasers and Morgan Stanley.
