Centuria Industrial REIT has acquired a portfolio of four industrial properties across Sydney, Melbourne and Brisbane for $129.4 million to grow its exposure to the last-mile logistics and distribution sectors.
The A-REIT said there were opportunities within the portfolio to capitalise on positive rental reversions from current under-renting, while the prime locations of the sites enabled future value-add opportunities.
“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,” said Jesse Curtis, CIP Fund Manager and Centuria’s Head of Industrial.
“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.”
The Gregory Hills asset is fully let to GMK Logistics and increases the REIT’s Sydney sub-portfolio to more than $1.1 billion.
Mr Curtis said the prime Sydney industrial market had aligned itself more closely with global market yields over the past 12 months.
He said the shift was due to eCommerce customer demand driving tenant requirements for warehousing within close proximity to large population catchments.
The Derrimut property is let to packaging manufacturer Signode Australia, while the Cooper Plains asset has four tenancies.
Colliers International’s Gavin Bishop, Sean Thompson and Fab Dalfonso were the agents for the Gregory Hills transaction, while CBRE’s Ben Hegerty was the agent for the Derrimut transaction.
Simon Beirne and Levi Maxwell, also from Colliers, were appointed agents for Coppers Plains, and Dawkins Occhiuto’s Chris Jones and Walter Occhiuto were the agents for the Port Melbourne transaction.
Australia’s industrial market continues to heat up
Australia’s industrial property investment market continues to heat up, benefiting from strong occupier market and favourable structural tailwinds.
According to Colliers, there were about $8 billion in transactions during the first half of 2021, compared to $5.5 billion for the entire 2020 calendar year.
Recent industrial portfolio deals have accelerated the pace of investment in the sector since mid-2021, with portfolio transactions representing 65% of deal volumes in H1 2021, up from 28% last year.
The increased appetite for industrial assets has placed further pressure on yields.
Colliers’ analysis of the major A-REITs in an earlier reporting season showed that the weighted average capitalisation rate (WACR) of their industrial assets compressed by 49 basis points to 4.61% over the six months to June 2021.
The acquisition comes just weeks after Ascott Capital sold a portfolio of mostly industrial properties located across Australia to GPT Group for $681.7 million, reflecting an initial yield of 4.3%.