Perth-based ASX-listed Primewest has continued its spree of property acquisitions with the purchase of a large scale industrial distribution centre in Adelaide for $22 million.
The 19,020-square-metre facility in Salisbury South sold on a yield of 6.54 per cent in a sale and leaseback transaction to Border Express, which has occupied the property at the sole tenant for more than 10 years. The property was sold by Tarranganda Pty Ltd.
The Border Express property is located within the Northern Adelaide industrial Precinct and returns a net passing income of $1.439 million.
“Border Express was a significant acquisition for the trust enabling it to uphold a 7 per cent per annum cash distribution to investors,” Primewest managing director David Schwartz said.
“A new five year lease was signed at settlement and of the 50,000 plus square metres of land, only 41 per cent is occupied, allowing for further development potential.”
Paul Tierney, Gavin Bishop and Sean Thomson of Colliers International oversaw the transaction.
Mr Tierney said there had been increased interest in Adelaide’s industrial market which was underpinned by significant government investment in infrastructure, increased defence spending, and improved conditions for mining and energy investment, as well as growth in e-commerce and transport logistics.
“Rarely is an asset of this prominence backed by a quality tenant covenant offered to the market; we saw the asset gain immediate market attention as the Border Express covenant provides one of the most secure cashflows in industrial real estate.”
Mr Bishop said that during the current COVID-19 health crisis the focus for investors had become the occupancy, tenure and covenant solvency for well- located, income-producing industrial real-estate.
“Given the low interest rate environment and robust underlying fundamentals of the Australian industrial and logistics market, accompanied by the weight in capital chasing defensive industrial investment product, we have seen continued demand from investors domestically and out of Asia, Europe and America.”
Primewest has been one of the most active industrial investors in the market over the past year. The acquisition of this property is the fifth asset within the Primewest Industrial Income Trust No.3, since it launched a year ago with the portfolio worth about $80 million.
Mr Schwartz said Primewest remained confident in the future of key industrial and logistics markets nationally was the group was looking to raise more funds for further acquisitions.
Primewest’s third Industrial Income Trust secured its first two blue chip properties in Queensland and South Australia in July 2019, valuing it at $30 million.
The first was Toll Group’s state-of-the-art distribution centre in the Chevallum Industrial Park on Queensland’s Sunshine Coast where Primewest purchased the land and then entered into a forward funded development agreement with a national developer to build the facility.
The second property acquired was a modern, industrial and logistics facility in South Australia leased to a national tenant Mastec Australia on a 17 year sale-and-lease-back basis.