Singapore-listed Frasers Logistics & Commercial Trust has bought three newly built logistics warehouses in Melbourne’s west for $61 million.
The 25,089 sqm portfolio comprised the properties at 1, 11 and 17 Magnesium Place in Truganina – an industrial precinct about 20 kilometres west from Melbourne’s CBD.
The properties were fully leased to STEDI, Goodride Tyres, Stoddart Group, and Signet with a weighted average lease expiry (WALE) of 6.6 years and fixed annual rent increments of 3%.
The assets had 300 kilowatts of solar photovoltaic panels and other sustainability features.
The REIT also owned six other assets in the same West Park Industrial Estate.
Robert Wallace, Chief Executive Officer of the REIT Manager, said the investment marked the continued deployment of their divestment proceeds from the sale of Cross Street Exchange in Singapore and would provide the REIT with further exposure to the attractive Melbourne logistics and industrial market.
“The new properties are of smaller tenancy sizes, providing a product offering that targets a differentiated tenancy base, making the new properties a complementary fit with FLCT’s existing industrial portfolio,” Wallace said.
“With the new properties being fully leased with a long WALE of 6.6 years and built-in annual rental escalations, the new properties will contribute to FLCT’s objective of providing stable long term returns to unitholders.”
The Melbourne West industrial precinct has seen continued growth in occupier demand, with total take-up at 205,690 sqm for the first quarter of 2022, remaining well above the 10-year quarterly average of 119,130 sqm, according to JLL Research.
Higher demand was reflected in Melbourne West as it accounted for 52% of the total take-up in Melbourne for the same period.
The current vacancy rate in the precinct sat at sub-1%, with the precinct’s prime net rent growing around 15% over the past 12 months to 31 March 2022.
Recent Melbourne industrial deals include Dexus Industria REIT’s sale of a warehouse in Kilsyth in Melbourne’s outer east for $22.17 million, representing a passing yield of 3.9%.
Wanslea Terrace sold a warehouse in Scoresby for $16.8 million last month, setting a new record for the area of $2731 per sqm, while Sector Property Group acquired a 6.19-hectare land parcel in Altona for $24.5 million in February.