Abacus Offloads Warehouse for $34m to Singapore REIT

Singapore’s Ascendas REIT has paid $34 million on a 6.85 per cent yield for a fully-leased industrial facility at West Park Industrial Estate, Derrimut, in Melbourne’s west.

Purchased by vendor Abacus Property Group in late 2013 for $20.95 million, the property comprises a single level, 31,048sq m warehouse on a 56,330sq m site with 55 per cent site coverage.

Located approximately 16 kilometres west of the Melbourne CBD with freeway access, the high-quality warehouse features 12 recessed loading docks, internal clearance of up to 13 metres, and car parking for approximately 220 vehicles.

The property was sold fully leased to three tenants with a total passing net income of $2.328 million and a three-year weighted average lease expiry by income.

Reading list: Abacus Lists $70m Bacchus Marsh Town Centre

Broker Chris Jones of Dawkins Occhiuto said the highly flexible configuration would facilitate a split into four tenancies or consolidation into one or two tenancies.

“This is a high quality industrial facility which offered a diverse and secure tenancy profile and solid growth prospects in one of Australia’s most sought after industrial locations and with the potential for further development,” Chris Jones said.

He said there had been a definite pick up in enquiry for particularly high-end industrial property in 2018 due to a shortage of quality investment stock across the board in commercial property, and the fact that industrial property continued to offer more attractive yields in a commercial market which had seen several years of yield compression.

Jones said the surge in demand for industrial property was also a product of the continued evolution of warehousing and distribution facilities forced by the rise of e-commerce which had driven greater tenant demand and had the potential to put upward pressure on rents.

“Industrial rents have started to see uplift, having been stagnant for years with upward movement in e-commerce, increasing land values and constraint on existing A Grade supply, particularly for industrial facilities in excess of 15,000 square metres,” Jones said.

ASX-listed Abacus and Singapore’s Wing Tai Holdings Limited have recently bought office tower 464 St Kilda Road Melbourne for $95.38 million as a long-term investment. Known as VACC House the eight-level building is expected to benefit from the forthcoming Domain Station, part of the Metro Rail Project.

In February, Abacus announced the purchase of two city fringe office buildings in Sydney and Melbourne for a total of $140 million.

It purchased Computershare's headquarters at 452-484 Johnston Street, Abbotsford in inner-city Melbourne for $93.5 million on a 5.85 per cent yield.

The Sydney acquisition was a $48.85 million deal for 11 Bowden Street in Alexandria, a modern commercial building with three levels of office space and rear ground car parking.