Arnott’s sells two factories in QLD and SA
Property funds manager Centuria Capital is finishing the year in striking fashion, snapping up two properties from the KKR-owned biscuit maker Arnott’s for its listed industrial trust for $236 million.
Centuria on Tuesday said its office trust raised capital to back the purchase of a $256 million Canberra complex, and the latest buy takes the overall funds empire, run by John McBain and Jason Huljich, to about $7.3 billion.
The portfolio was put on the block after US investment firm KKR, formerly known as Kohlberg Kravis Roberts, bought the Tim Tam maker from food giant Campbell’s Soup as part of a $US2.2 billion ($3.2 billion) deal in August.
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Campbell’s bought the 150-year-old company in 1997 and flagged a sale last year as part of a plan to reduce debt. KKR swooped and then offered the property portfolio via investment bank UBS and real estate agency CBRE.
The Centuria Industrial REIT said on Wednesday it had struck the sale and leaseback deals with Arnott’s and launched a $154 million placement at an issue price of $3.41 per unit.
The raising is being handled by Moelis, UBS and JPMorgan. The trust also revalued nine of its existing 46 properties, resulting in an increase of $19 million, or 9.5% on prior valuations.
The fund also reaffirmed its fiscal 2020 funds from operations and distribution per security guidance.
The properties are at 46 Robinson Road East, Virginia, in Queensland, and at 23-41 Galway Ave, Marleston, South Australia. The Queensland property is valued at $211.8 million and the South Australian asset at $24.4 million.
Centuria’s head of funds management, Ross Lees, says the acquisition of the two high quality industrial assets materially increased the trust’s portfolio weighted average leave expiry and overall scale.
The fund’s portfolio value will increase to more than $1.5 billion, locking in its position as Australia’s largest pure play industrial REIT and increasing its near-term prospects for inclusion in the S&P/ASX200 index.
The properties are fully leased to Arnott’s, the iconic Australian brand that sold to the US private equity company this year.
The company dominates the manufacture and supply of Australian biscuits and the properties contain significant “mission critical” infrastructure that is core to the tenants’ ongoing operations.
Both assets feature long term, triple net leases with a combined lease term of 27.7 years and fixed annual reviews supporting future income streams.
Centuria Industrial REIT’s portfolio metrics will be significantly strengthened, with the acquisitions increasing the portfolio WALE from 4.4 years to 7.2 years and introducing a new national tenant customer to the REIT.
The raising issue price of $3.41 per unit represents a 3.9% discount to the last close price of $3.55 on December 10.
Gearing is forecast to be 35.1% following completion of the acquisitions and placement, providing it with the capacity to pursue future opportunities in line with its strategy.
This article originally appeared on www.theaustralian.com.au/property.
