Altis Property Partners has splashed $32.5 million on an industrial shed in the heart of an Olympic hotspot in Brisbane.
The fund manager has acquired the multi-tenanted 12,034sq m complex at 112 Cullen Avenue, Eagle Farm for its diversified Altis Real Estate Equity Partnership, with the Brisbane City Council as one of its tenants.
The shed has six tenants on shorter leases, which attracted the fund manager to the property, according to Altis director of investment management and capital James King.
“We are thrilled to add this asset to Altis’s diversified AREEP4 fund due to its diversified income and near-term positive rental reversion opportunity due to the short weighted average lease expiry (WALE),” King said.
“This acquisition reflects the exact type of asset the fund is targeting with the ability to access value by increasing the net rental income and extending the WALE in a tightly held precinct with the lowest vacancy rate of about 0.6 per cent in the Brisbane industrial market.
“Despite the headwinds caused by the inflationary environment we find ourselves in, we feel strong supportive fundamentals remain for the industrial sector at the right entry prices.”
The property is positioned in the Australia Trade Coast precinct and Northshore Hamilton Priority Development Area, 5km north of the Brisbane CBD.
It is also within spitting distance of one of the major areas earmarked for Brisbane Olympic Games infrastructure, including the Olympic and Paralympic Athletes village. The area is slated for significant development over the next decade ahead of the Games, which Altis director of capital transactions Gareth Price said made it an appealing acquisition.
“One of the key characteristics which attracted us to this asset is the benefit from the future infrastructure investment in the precinct,” he said.
“The Northshore Hamilton Priority Development area will undergo a major transformation into a vibrant, mixed-use precinct. This new industrial acquisition fits within our strategy of buying in core markets, centrally and conveniently located to employment hubs, with access to key infrastructure.”
While yields have compressed significantly over the past two years, rents remain strong, reinforcing the asset class as a mainstay for institutional investment.
Industrial was 2022’s “golden child” of real estate assets, and it won’t be losing the mantle any time soon, according to research from Colliers, but they are forecasting a softening in the sector in 2023.
The weighted average national industrial prime rent (net face) grew by 21.7 per cent in 2022, six times the 10-year average of 3.6 per cent a year, Colliers said.
Short weighted average lease expiry (WALE) industrial stock would remain strong throughout 2023, it said.
Altis has acquired and developed more than $8 billion of real estate with current assets under management of about $6 billion. It was acquired by Barings in August last year.
