APN Recycles Capital in Recent Industrial Acquisitions

30 June 2021

The APN Industria REIT has completed $50m of industrial transactions as it increases its weighting to Victorian markets to chase higher quality stock.

The REIT announced the sale of 10 Brandl St, Eight Mile Plains, Queensland, for $12.55 million – a 24.2% premium to book value, enabling the fund to deploy the capital into the acquisition of 57 – 67 Mark Anthony Drive, Dandenong South, for $13.485 million; and 137 – 143 Fitzgerald Road, Laverton North, Victoria for $24.1 million.

10 Brandl St, Eight Mile Plains, was acquired as a value add re-leasing opportunity in October 2019 for $10million. Income from the property ceased in January 2021, and during the re-leasing campaign APN was approached to sell the asset at a price that exceeded the anticipated return that could have been achieved following a successful lease-up. The sale price of $12.55 million generates a total annualised return of 14.5%, inclusive of stamp duty and all associated costs of ownership, and a 24.2% premium to book value.

ADI continues to own $170.0 million of assets at Brisbane Technology Park valued at an average cap rate of 7.0%.

The capital released from the sale of 10 Brandl St, as well as additional debt to be drawn, will be deployed into two industrial properties in core locations underpinned by 10-year triple net leases.

The Funds’ acquisition of 57 – 67 Mark Anthony Drive, Dandenong South, reflects 5.0% cap rate and initial yield, and a capital value of $1,722 per square metre. The property comprises of 7,830 square metres of warehousing with drive around B-double access, high clearance and multiple cranes. The tenant is UNeek Bending, a steel fabrication business established in 1964 specialising in defence, infrastructure and energy projects.

Also in Victoria, the acquisition of 137 – 143 Fitzgerald Road, Laverton North, reflects a 5.1% cap rate and initial yield, and a capital value of $1,471 per square metre. The 16,335 square metre warehouse is located in a prime location adjacent to Doherty’s Road, has B-double drive around access, and the opportunity to add value over time by improving the utilisation of the land. The tenant is Period Timber Mouldings, which was established in 1995, and supplies products to over 320 separate retailers including Bunnings, Mitre 10, and Home Timber & Hardware.

Commenting on the transactions, Fund Manager Alex Abell said: “Recycling 10 Brandl St demonstrates our ability to make sound value judgements when buying and selling, whilst the industrial acquisitions add to our credentials of acquiring well located and functional warehouses at attractive prices. This is consistent with our approach over many years, which has driven the total portfolio value to $1.08 billion, and we look forward to continuing to drive securityholder value moving into financial year 2022.”

As a result of these transactions, gearing will increase by approximately 1.9% and annualised earnings accretion will be approximately 2.5%.

Further Information

The APN Industria REIT has performed exceptionally well over the past 12 months. The Fund ought to be trading at a premium to NTA at present given that the y continue to hold industrial assets on valuations of 7%. Their May announcements on valuations indicated an NTA of $3.18. The current price of $3.32, indicates a premium to NTA of 4.4%.

The APN Industria REIT is on our Top Pics List.

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