COMMERCIAL PROPERTY, SALES & LEASINGREAL ESTATE INVESTMENT TRUSTS & FUNDS

Charter Hall pays $70m for Sydney logistics

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THE Charter Hall-managed Core Logistics Partnership has acquired a Bunnings leased asset spanning 1.9 hectares in the heavily sought after south Sydney industrial market, on which it plans to develop a new logistics facility close to the CBD, port and airport.

The trust bought hectare parcel at 520-530 Gardeners Rd, on the corner of Bourke Rd, in Alexandria for $70 million via an off-market acquisition. The deal comes hot on the heels of Charter Hall’s wholesale partnership LWHP acquiring six Bunnings Warehouses for $353 million, but this latest transaction is a development play.

The sale has realised a $54 million profit for businessmen David Gonski, John Curtis and philanthropist Simon Mordant in just five years.

Bunnings has operated a Bunnings Warehouse store on the site for 20 years, and the property sold as an opportunity to secure an income generating land bank, with a remaining lease term of 4 years. However, Charter Hall has negotiated a surrender package with Bunnings who no longer need the facility.

Located about 6kms from the CBD, the property is 2.5kms from Sydney Airport and 6kms from Port Botany, and is close to the St Peter’s WestConnex Interchange which will link the M4 and M5 upon opening in 2023.

Charter Hall managed nab the site during a period of gentrification that has seen large parcels of land being rezoned from industrial to high density residential and mixed use. Much of that is owed to the $13 billion Green Square urban renewal project between the City of Sydney and Landcom, with the final stages sold in October to Mirvac, which was already Landcom’s development partner.

“The property provides excellent redevelopment options including the ability to develop a high-profile logistics or last mile facility under the current zoning,” Core Logistics Partnership (CLP) fund manager, Simon Greig said.

“South Sydney is one of the most sought-after industrial precincts in Australia given the access to major transport hubs, the Sydney CBD, port, airport and surrounding densified residential precincts.

“This acquisition is aligned with CLP’s strategy to replenish its development landbank and grow its Sydney portfolio. It will capitalise on strong demand for industrial and logistics facilities in the South Sydney area.”

David Harrison, group managing director and chief executive of Charter Hall, said the off-market acquisition and the relationship with Bunnings has the group to access a high profile corner site with multiple development options.

The platform’s industrial and logistics portfolio now exceeds $11 billion, with leases to more than 140 tenant customers, and a pre-leased development pipeline exceeding $1.5 billion. Charter Hall has just secured backing from Dutch pension fund PGGM for a new $800 million industrial real estate wholesale partnership, which it will seed with a portfolio with seven assets, and this year acquired a portfolio of four Aldi distribution centres for $649 million in partnership with Allianz, purchased a 30.6 hectare automotive logistics park in Sydney’s Minto, and picked up the for Owen-Illinois Australia portfolio in a $214 million sale and leaseback deal.

Harrison added that Charter Hall will “continue this 13 year strategy to expand our market share of the prime logistics sector for the benefit of our investors.”

Charter Hall was introduced to the opportunity by Josh Charles of One Commercial.

Charter Hall Core Logistics Partnership now comprises 38 industrial and logistics properties valued at approximately $2 billion, with a weighted average lease expiry of 9.3 years, average annual rent increases of 3% and 99.7% occupancy.

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