Stockland locks in KKR and M&G for logistics alliance

Ingleburn Logistics Park in southwest Sydney, part of a new Stockland partnership with M&G

Property giant Stockland has closed deals worth about $800m in total that will result in US private equity house KKR and British funds giant M&G Real Estate joining it as partners in growing its logistics operations.

The listed developer is teaming with M&G on a major Sydney ­facility and will partner with KKR on new projects in the sector, with the initial focus also on the gateway city.

The Stockland M&G Asia Partnership Trust is a 50-50 open-ended core partnership with M&G Real Estate, which is seeded with Ingleburn Logistics Park in Sydney. The initial asset has a gross value of about $415m.

The Stockland Logistics Partnership Trust is a 70-30 open-ended core-plus partnership with KKR – the private equity firm holding a 70 per cent stake – that is seeded with three Sydney assets with an initial value of $388m.

The company indicated it would talk with both its new partners about new opportunities in the still hot industrial and logistics sectors.

Under chief executive Tarun Gupta, Stockland has struck a ­series of alliances as it has forged into new areas, and Stockland chief executive, investment management, Kylie O’Connor flagged more opportunities.

Stockland managing director and chief executive Tarun Gupta. Picture: Jane Dempster

“The formation of these partnerships with leading global capital partners further delivers on Stockland’s strategy to scale our capital partnerships across each of our real estate sectors,” Ms O’Connor said.

“We now have seven partnerships across workplace, MPC, LLC and logistics, noting the strength of our existing portfolio and development pipeline. We are confident that we’ll be able to offer further opportunities to partner across all sectors in the future.”

Stockland has been active in land lease, housing estates, where it has partnered with both Invesco Real Estate and Mitsubishi Estate Asia, as well as taking on a backer for a life sciences business park in Sydney. It has also expanded the Invesco tie-up, adding four sites to the partnership.

Stockland first went to market seeking a capital partner for more than $2bn worth of warehouses and logistics centres in mid-2023, when the industrial sector was running hot as demand for space drove up rents.

Prices came back as interest rates were lifted, but large institutions are still keen on the area as it rides both the e-commerce boom and the ongoing shortage of space in key locations. Stockland is already in the top ranks of industrial property developers in the nation and could ­accelerate its rollout of new centres by taking on the new capital partners.

M&G is acquiring a stake in a major existing centre that Stockland already owns, while KKR would back the development of new projects in key city locations.

The deal was handled by real estate agency CBRE’s Stuart ­McCann, Paul Ryan and Chris O’Brien. The agency declined to comment.

On the development side, KKR’s core-plus fund will strike up a relationship with Stockland starting with the $388m parcel of assets. They include Leppington Business Park, 23 Wonderland Drive and a site in Banksmeadow.

Leppington Business Park is a 10ha site comprising 57,200sq m of premium warehousing and office space. The estate sits in a newly ­released industrial precinct at the gateway to the planned Western Sydney Aerotropolis and Nancy Bird Walton International Airport.

It was bought in 2020 and spans 57,219sq m of space. Tenants include IFC Global Logistics, JD Sports Fashion Australia, Nisbets Australia and Next Logistics.

Stockland chief executive, investment management, Kylie O’Connor.

Wonderland Drive comprises a modern warehouse that spans 23,200sq m. The estate is fully leased and sits in the western Sydney industrial precinct of Eastern Creek.

Stockland Momenta is in Sydney’s southern suburbs, near Port Botany and the M5 Motorway. The multi-level development will comprise about 16,000sq m on completion and will consist of a two-level warehouse with associated office and carparking.

KKR knows the Australian logistics scene well and has backed a venture by property funds manager Centennial in the area.

British funds manager M&G is already a well-known investor in Australia. It is a large backer of Sydney’s office market and owns a half stake in 400 George Street.

In the Stockland deal, M&G is taking an interest in Ingleburn Logistics Park, a 28ha site comprising about 163,872sq m of prime, modern warehousing and distribution facilities.

The estate has about 49,000sq m of warehouse space and is also near the M5 and M7 motorways and southwest Sydney industrial markets.

Major tenants include Next Logistics, Hipotek Grosser, Smeg Australia and Toll Transport. M&G said the acquisition was struck for $207.5m for the M&G Asia Property Fund.

In 2021, M&G also committed $200m via its indirect fund of funds mandate into a partnership with ESR to develop an Australian real estate portfolio investing in the logistics sector.

M&G took a 20 per cent stake in the partnership, which launched in 2020 with two western Sydney logistics projects. It has an active developable land pipeline with an anticipated end value of more than $1bn.