LOOKING to capitalise on the growing demand from mum and dad investors for industrial real estate, the unlisted Centuria Diversified Property Fund (CDPF) has made its first acquisitions in the sector, buying an Adelaide warehouse development and a maintenance depot in Perth with a combined end value of $50 million.
CDPF is looking to raise about $30 million in capital to fund the acquisition.
It has bought a 5.4-hectare greenfield site at 36 Caribou Drive in Direk and will fund through the development of a 22,000 warehouse with an end value of $38.25 million. The steel storage and distribution facility is being custom-built for Apex Steel Suppliers a 15-year lease.
The development will include 820 sqm of office space, heavy-duty hardstand, full drive around B-Double truck access, and multiple on-grade roller doors with canopies for undercover loading.
The 40% site coverage also enables future expansion. It is within the same estate as Centuria Industrial REIT’s 9-13 Caribou Drive facility that is leased to Fisher & Paykel. Neighbouring occupiers include Rand, Lindsay Transport, Cahill Transport, Hentschke Transport, SCF Containers and Nick Scali.
The northern industrial precinct benefits from close proximity to Highway 1 and the recently completed Northern Connector.
Completion is expected in January 2023.
CDPF has settled the acquisition of an $11.75 million purpose-built vehicle maintenance depot at 171 Camboon Road in Malaga, fully leased to a wholly-owned subsidiary of ASX-100 listed Cleanaway Waste Management Ltd on a 4.3-year term.
Strategically located within the northern Perth industrial precinct, the facility benefits from close proximity to the Tonkin and Reid Highways and includes a 3,228 sqm multi-level office, workshop with canopies, and truck wash facilities. The low 18% site coverage within 1.8 hectares provides a value-add opportunity to redevelop and increase its potential in the future.
Transpacific Cleanaway Pty Ltd, a wholly-owned subsidiary of Cleanaway Waste Management, as occupied the site since the 1980s.
The facilities have a combined 11.45-year weighted average lease expiry.
While they are first industrial acquisitions for the five-year-old diversified fund, they build on Centuria’s existing $4.8 billion industrial portfolio.
CDPF’s industrial asset weighting is 21.5% while the portfolio’s WALE extends from 3.65 years to 5.17 years, and portfolio occupancy to 98.9%.
“There is strong appetite from retail investors to secure quality industrial logistics assets that deliver compelling yields, especially in this low interest rate environment,” Jason Huljich, Centuria joint CEO said.
“We have seen this for our unlisted, fixed-term Centuria Industrial Income Fund No 1, which was oversubscribed in February with more than $40 million raised predominately from mum and dad investors, and in New Zealand we raised approximately $110 million for the single-asset Visy glass manufacturing facility fund.
“These market conditions often attract the interest of offshore institutions, which is why we aim to secure Australian assets for Aussie retail investors through our unlisted fund offerings.”
The fund has delivered a 12.96% per annum total net return since its inception in 2016. It now includes six direct assets, nine indirect investments via Centuria’s unlisted funds, investment in listed AREITs, and cash-like products, collectively worth $242 million.
“The industrial acquisitions are in line with CDPF’s strategy to further diversify the fund’s direct property investments and supports investors’ appetite for this asset class,” Ross Lees, Centuria head of funds management said.