Centuria has boosted its pure-play industrial fund with four assets in New South Wales, Victoria and Queensland to take its real estate investment trust portfolio to more than $3.6 billion in assets.
More than 80 per cent of the acquisitions are weighted to the hotly contested Sydney and Melbourne industrial markets on yields as low as 3.7 per cent.
Centuria Industrial REIT (CIP) fund manager Jesse Curtis said the acquisitions were strategic within tightly held industrial markets that were benefiting from low vacancy rates and increasing rental prices and demand.
“The acquisitions lend themselves to last-mile logistics and distribution tenant customers and benefit from strong tailwinds across Australia’s industrial sector, particularly from the strong rise in eCommerce adoption and supply chain onshoring,” Curtis said.
“These assets align with CIP’s strategy to acquire assets located in land constrained urban infill markets, where tenant demand currently outstrips forecast supply.
“The portfolio of assets provides a number of opportunities to actively manage the portfolio to add value through capturing outsized rental growth from under-renting of the assets and potential development or activating higher and better use potential.”
Curtis said the 3.7 per cent yield on the $70-million transaction of 82 Rodeo Road at Gregory Hills in south-west Sydney was comparable to international industrial yields, following significant compression over the past two years.
CIP’s Sydney sub portfolio is now worth more than $1 billion after almost $370 million in transactions this year.
“Throughout the past 12 months, the prime Sydney industrial market has aligned itself more closely with global market yields due to eCommerce customer demand driving tenant requirements for warehousing within close proximity to a large population catchment,” Curtis said.
“Gregory Hills is highly desirable given south-west Sydney’s strong population growth and excellent connectivity to major arterials roads, accessing a large distribution network.”
CIP also spent more than $20 million on a Derrimut industrial facility, $18 million on a 2392sq m site at Port Melbourne, and $20.8 million on an industrial estate at Coopers Plains in Brisbane.
Colliers International’s Gavin Bishop, Sean Thompson and Fab Dalfonso were the agents for the Gregory Hills transaction. Simon Beirne and Levi Maxwell, also from Colliers, were appointed agents for Coopers Plains.
CBRE’s Ben Hegerty was the agent for the Derrimut transaction and Dawkins Occhiuto’s Chris Jones and Walter Occhiuto were the agents for the Port Melbourne transaction.
The weighted average lease expiry across the four sites is 3.5 years, with an average yield of 4 per cent.