Three Arnott’s Factories Sell for $633m

Asset-hungry Centuria Funds has rounded out a year of high transactional activity by snapping up two Arnott’s Biscuits factories in Queensland and South Australia for $236 million.

The Arnott's assets were put up for sale after US private equity giant KKR bought the Tim Tam maker from food giant Campbell’s Soup in a $3.2 billion deal earlier this year.

The 150-year-old Arnott’s business is famous for its Tim Tam and Scotch Finger biscuits.

The first of the two properties, Arnott’s main base in Queensland located at 46 Robinson Road East in Virginia, was picked up for $211.8 million in a deal negotiated by CBRE and UBS.

The factory sits on a 7.18 hectare site the factory has a gross lettable area of 44,785 square metres and will be added to Centuria's Industrial REIT.

In the leaseback arrangement Arnott’s signed a 30-year lease on the industrial asset. The deal was realised an initial yield of 5.8 per cent.

The second location, a smaller 23,593-square-metre Adelaide factory in the suburb of Marleston was acquired for $24.4 million on an initial yield of 5.8 per cent with a 12-year lease.

“The acquisition of these two high quality industrial assets materially increases CIP’s portfolio WALE and overall scale,” Centuria head of funds management Ross Lees said.

“Arnott's is an iconic Australian brand with the leading market position in the manufacture and supply of Australian biscuits.

“The assets contain significant 'mission critical' infrastructure that is core to the tenants ongoing operations.”

Centuria highlighted its portfolio value would now increase to more than $1.5 billion, securing its position as Australia’s largest pure play industrial REIT and increasing its near-term prospects for inclusion in the ASX index.

The factory acquisitions will increase its portfolio WALE from 4.4 years to 7.2 years and introducing a new national tenant customer to the REIT.

Centuria noted that the Arnott's assets were consistent with the fund's focus on identifying quality real estate located within infill markets with close proximity to major infrastructure.

The Sydney-based fund manager has also independently revalued nine of its existing 46 properties, leading to an increase of $19 million or 9.5 per cent on prior valuations.

As a result of these revaluations, the portfolio's weight average capitalisation rate firmed six basis points to 6.41 per cent prior to the acquisitions.

Centuria said its portfolio value would now increase to more than $1.5 billion, securing its position as Australia’s largest pure play industrial REIT and increasing its near-term prospects for inclusion in the ASX index.

A third Arnott's facility located in Huntingwood, New South Wales was captured by Charter Hall for $397.8 million with a weighted average lease expiry of 32 years.

The Charter Hall managed Charter Hall Prime Industrial Fund (CPIF) has acquired a 50 per cent interest in the Arnott’s facility while the other 50 per cent interest will be acquired by the ASX listed Charter Hall Long WALE REIT.

“We are delighted to welcome Arnott’s as a tenant customer of Charter Hall, Charter Hall industrial and logistics chief executive Richard Stacker said.

“With a portfolio of iconic products [Arnott's] can be found in 95 per cent of Australian households commanding about 61 per cent share of the Australian biscuit market.”