Property heavyweight Dexus is riding the logistics property boom and have struck a major deal in western Sydney as part of the listed company buying up an overall $173.5 million worth of assets.
The Dexus Australian Logistics Trust, in which Dexus holds a 51% interest, has bought two industrial properties, delivering on its active acquisition and development mandate with Singaporean fund GIC.
The properties are Wentworth St in Sydney’s Greenacre and the Ford Facility at Merrifield Business Park in the Melbourne suburb of Mickleham, developed by MAB and GPC.
They were acquired for a combined price of $173.5 million. The Dexus share was $88.5 million.
The Greenacre property is a 19,246sqm modern cold store and ambient facility leased to Real Dairy Australia and Tomkin. It includes 5950sqm of expansion space under development for Real Dairy Australia.
Gavin Bishop and Sean Thomson of Colliers International sold the Greenacre facility.
“This sale emphasises the flight to quality thematic that we are witnessing throughout the COVID-19 pandemic, along with the defensiveness and resilience of the Australian industrial capital markets,” Bishop says.
“Given the current environment, the focus from all investors is high-quality, well-located, income-producing assets with strong covenants; reflected within this sale,” he says.
Thomson says it has been a quieter period but demand is still holding up. “We have seen an almost 50% reduction in transactions across the first half of 2020 in comparison to the same time last year,” he says, noting about 63% of deals had been for A-grade stock, where values had held at the same level as before the COVID-19 pandemic.
The Greenacre asset will have a weighted average lease expiry by income of about 13½ years and will generate a passing yield of 5%, with fixed annual increases of 3%per annum.
Merrifield is a new 51,595sq m prime grade logistics facility currently being developed for Ford Australia as its national distribution centre for spare parts. The site is in an emerging industrial market, strategically located for metropolitan and interstate goods distribution, providing direct access to Hume Highway.
On completion, the asset will have a weighted average lease expiry by income of 10 years and will generate a passing yield of 5.25%, with fixed annual increase of 3.25% over the initial lease term.
The acquisitions follow Dexus making more than $1.6 billion worth of property acquisitions across the group during the 2020 fiscal year.
This article originally appeared on www.theaustralian.com.au/property.
