Welcome to this weeks Property News.
The approaching year end deadline has not stopped the progress of major property deals as the market continues to see funds deployed across the sectors in the hunt for more than just a low passing yield.
This weeks news that Blackstone has acquired GIC’s stake in the 77 asset portfolio forming part of the Dexus Australian Logistics Trust, took some by surprise. Whilst in April 2021 one arm of Blackstone sold its $3.8bn portfolio of industrial properties to ESR on an initial yield of 4.5%, another Blackstone Fund has see the merits of buying back into a similar portfolio of industrial properties less than 9 months later on similar metrics. To justify the transaction, Blackstone will be banking on above average rental growth to provide the Core+ returns that the Fund is expecting to deliver.
The secondary office markets of North Sydney, Parramatta and St Kilda were also the focus of investment this week with $657m of commercial assets sold in the 3 markets this week. Secondary office markets have performed well during the COVID pandemic with higher than expected occupancies and ongoing tenant demand.
In North Sydney, 3 major transactions were completed, including the sale of 100 Arthur Street by CLA Real Estate Holdings for $372m, 75 Miller Street was sold by a Hong Kong investor for $65.5m and 41 McLaren Street was sold to Stadia Capital for $80m.
In Parramatta GPT acquired additional further development sites in George Street whilst Australian Unity sold is Phillip Street asset for $66m and in St Kilda Barwon Investments acquired 607 StKilda Rd for $74.3m.
The trend this week is very clearly in favour of securing real estate assets which will provide a hedge against future inflation. ie assets with relatively short WALEs in markets where improving infrastructure and tenant demand will create circumstances that will lift rents at or above the rate prevailing rates of inflation. A good move in my mind.
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Until next week