Centuria’s Industrial real estate investment trust has splashed $132.4 million on six infill sites across the eastern seaboard to kick off 2022.
Three of the acquisitions neighbour Centuria assets, which would enable the REIT to consolidate larger sites and capitalise on the constrained land and urban infill markets.
Half of the properties also transacted at yields of less than 4 per cent as the industrial sector’s hot streak continues.
Centuria’s head of industrial Jesse Curtis said the acquisition of an 8-hectare site at Campbellfield in North Melbourne represented a development opportunity for a five-unit industrial estate with a completed value of $104.1 million.
“The Campbellfield site provides a rare, value-add opportunity to deliver a much-needed new and sustainable multi-unit industrial estate.
“With tenancies ranging from 3,200sq m to 20,000sq m, it caters to the most active leasing size range in the market.
“The north Melbourne industrial market has vacancy of less than 2 per cent and is attracting strong interest from high-quality tenant customers. This backdrop gives us confidence to deliver state of the art, sustainable industrial facilities.”
The 44,000sq m industrial estate at 90-118 Bolinda Road would be developed in partnership with Cadence Property Group, who also partnered with Centuria in an $89 million development at Dandenong, which is presently under way.
Cadence Property Group managing director Charlie Buxton said there was a lack of modern logistics accommodation in infill markets, and the development would be sought-after.
Buxton said construction was expected to commence in 2023 with a target of achieving Five-Star Green Star rating.
CIP’s 2022 acquisitions
|Location||Value||Yield||Gross lettable area|
|90-118 Bolinda Road Campbellfield||$37.7m||4.5%||8210sq m|
|159-169 Studley Court, Derrimut||$17.1m||4.3%||7725sq m|
|43-49 Wharf Road, Port Melbourne||$11.5m||3%||2387sq m|
|8 Hexham Place, Wetherill Park NSW||$12.2m||3.6%||3217sq m|
|590 Heatherton Road, Clayton South||$27.5m||4%||9575sq m|
|5/243 Bradman Street, Acacia Ridge||$26.5m||3.9%||9897sq m|
A highly competitive industrial market continues to drive yield compression, particularly in Sydney, where Centuria’s $12.2 million Wetherill Park acquisition transacted at 3.6 per cent.
A shed at 43-49 Wharf Road, Port Melbourne transacted at 3 per cent.
Four out of the six recent acquisitions were in Victoria at Derrimut, Port Melbourne, Campbellfield and Clayton South, while the REIT bought up an industrial asset at Acacia Ridge in Queensland, also at less than 4 per cent yield.
“One of CIP’s strategic focuses is to provide its investors with exposure to urban infill industrial locations that cater to last-mile, ecommerce operators,” Curtis said.
“The urban infill locations of these eastern seaboard acquisitions provide a favourable leasing outlook for rental growth, underpinned by near zero vacancy, buoyant tenant demand and limited land supply. These conditions provide opportunities to extract outsized returns from the assets.”
The acquisitions increase CIP’s total portfolio to about $4 billion and will be funded by new and existing debt facilities.