Ascott Capital has sold a portfolio of 24 industrial and office properties located across Australia to GPT Group for $681.7 million, reflecting an initial yield of 4.3%.
The deal comprises 23 fully let logistics properties totaling 161,700sqm of gross lettable area and a weighted average lease expiry (WALE) of 9.8 years.
The sale also includes a 10,200sqm office building located in the Canberra CBD, with a WALE of 4.7 years.
“The Ascot portfolio with a 9-year WALE and strong tenant covenants is a great addition to GPT’s existing $3.5 billion logistics portfolio and is in line with our strategy to continue to grow our exposure to the logistics sector through developments and acquisitions,” said GPT Chief Executive Officer Bob Johnston.
“The acquisition will increase GPT’s investment portfolio weighting to the logistics sector to 26%, progressing us closer toward our medium-term target of approximately 30%.
“Growth in the sector will also be realised through GPT’s logistics development pipeline, with an expected end value of approximately $1.4 billion.”
CBRE’s Chris O’Brien and Tim Church of Morgan Stanley steered the sale.
Government, ASX-listed and multinational tenants account for about 70% of the portfolio’s tenant base by income, which is in line with GPT’s existing portfolio.
The portfolio is also 75% weighted to eastern seaboard states and the ACT.
Mr Johnston said the acquisition would increase GPT’s logistics portfolio to $4.1 billion of assets under management, reaffirming its position in the Australian logistics market.
“Strong levels of take-up for prime logistics space has resulted in low vacancy rates in the sector and demand is expected to continue to be underpinned by growing investment in supply chain infrastructure,” he said.
In Australia, there was more than $12 billion worth of industrial property sales across 217 deals during the 12 months to June 2021, according to Savills’ research.
It was the highest volume of sales on record, in dollar terms, and much higher than the 10-year average of $5.6 billion.
Industrial property yields continue to compress across the country due to strong investor demand, with market yields below 5% in certain parts of Sydney, Melbourne and Brisbane.
Ascott Capital also sold three offices in Brisbane, Port Macquarie and Adelaide to MA Financial for a reported $115 million.