Dexus Industria REIT has sold a warehouse in Melbourne’s outer east for $22.17 million, representing a passing yield of 3.9%.
The 147-153 Canterbury Road industrial property was located in Kilsyth – about 36 kilometres east from Melbourne’s CBD.
Built in 1972, the 11,882 sqm warehouse was situated on a 2.3-hectare site and was fully leased to Dulux Group subsidiary B&D Australia.
The REIT said the sale price reflected a 17% premium to its end-2021 book value, while total unlevered return was anticipated to be 35% over the period of ownership.
“The sale price is 233% above the $9.5 million acquisition price in May 2019, and demonstrates that our asset selection and active management creates significant value,” the REIT’s Fund Manager Alex Abell said.
“Sale proceeds will be used to repay debt and strengthen the balance sheet, and over time will be used to fund higher returning opportunities including DXI’s developments in Sydney and Perth, as well as the on-market securities buyback program.”
Settlement was expected in late June.
It’s the latest industrial property deal in Melbourne after MAB Corporation bought a 32.57-hectare industrial site in Cranbourne East last week.
Wanslea Terrace sold a warehouse in Scoresby for $16.8 million earlier this 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.
Australia’s industrial property market remains popular among investors, with rental growth continuing to rise across all asset classes during the first quarter of this year, according to CBRE. The national vacancy rate remained at sub-2% during Q1.
Gross floorspace take-up equated to only 181,447 sqm in Q1, which was about half the take-up recorded during the same period last year.
CBRE said lower lease transactions reflected the record low vacancy rate, with Melbourne activity being dominated by occupier activity.
The development supply pipeline forecast for 2022 was relatively strong, with 2.7 million sqm of new floorspace expected to be added to the market. Only 8% of the 2022 total was delivered in Q1.