CIP Bolsters Value-Add Pipeline with Six Urban Infill Acquisitions

Centuria Industrial REIT has acquired six high-quality industrial assets across Australia’s eastern seaboard with a combined value of $132.4million.

The assets capitalise on land constrained, urban infill markets that are in high demand from ecommerce operators seeking close proximity to densely populated areas to improve supply chain efficiencies.

Among the acquisitions is an eight-hectare site in the north Melbourne industrial market of Campbellfield, which has a short term lease. Upon lease expiration, a Project Delivery Agreement (PDA) will take effect and a brand new, sustainable five-unit industrial estate of approximately 44,000sqm will be delivered.

The acquisitions in Derrimut, Port Melbourne and Wetherill Park, adjoin existing CIP assets. The Acacia Ridge and Clayton South acquisitions build further scale in CIP’s sub-portfolios in the infill markets of south Brisbane and southeast Melbourne, respectively.

Jesse Curtis, CIP Fund Manager and Centuria’s Head of Industrial said, “One of CIP’s strategic focuses is to provide investors with exposure to urban infill industrial locations that cater to last-mile, ecommerce operators. The urban infill locations of these eastern seaboard acquisitions provide a favourable leasing outlook for rental growth, underpinned by near zero vacancy, buoyant tenant demand and limited land supply. These conditions provide opportunities to extract outsized returns from the assets.

“The purchase of this portfolio marks a strong start to 2022 and continues to demonstrate CIP’s management capability to source and execute on strategic acquisitions. The Campbellfield site provides a rare, value-add opportunity to deliver a much-needed new and sustainable multi-unit industrial estate to attract high-quality tenant customers and premium rents. The other acquistions’ WALE and rent review structures provide rental upside opportunities. The acquisitions adjoining existing CIP-owned assets create future development sites of scale in desirable and land constrained urban infill markets.”

Acquisitions

90-118 Bolinda Road, Campbellfield VIC was secured for $37.7million. In partnership with Cadence Property Group, a five-unit industrial estate will be delivered with tenancies ranging from 3,200sqm to 20,000sqm catering to the most active leasing size range in the market. The 44,000sqm estate will provide an estimated on-completion value of $104.1million. The site will be developed in partnership with Cadence Property Group who also partnered with CIP on the $89million Southside Industrial Estate in Dandenong, which is currently under development. Construction is expected to commence in 2023 with practical completion in 2024. The estate will target a Green Building Council of Australia Five-Star Green Star rating.

Charlie Buxton, Cadence Property Group Managing Director, added, “We are excited to be partnering with CIP again to deliver another A-grade infill logistics park, this time in Melbourne’s north. Our experience to date, in other infill markets, is that there is a real lack of modern logistics accommodation and that the product is well sought after by tenants wanting to remain in infill locations. We expect this development to target a similar demand profile.”

CIP’s other recent acquisitions include sites in Derrimut, Port Melbourne and Wetherill Park, which adjoin existing CIP assets. The Acacia Ridge and Clayton South acquisitions build further scale in CIP’s sub-portfolios in the infill markets of south Brisbane and southeast Melbourne, respectively.

Mr Curtis, continued, “One of CIP’s strategic focuses is to provide its investors with exposure to urban infill industrial locations that cater to last-mile, ecommerce operators. The urban infill locations of these eastern seaboard acquisitions provide a favourable leasing outlook for rental growth, underpinned by near zero vacancy, buoyant tenant demand and limited land supply. These conditions provide opportunities to extract outsized returns from the assets.

“These six acquisitions mark a strong start to 2022 and continue to demonstrate CIP’s management capability to source and execute on strategy acquisitions. The acquisitions adjoining existing CIP-owned assets create future development sites of scale in desirable and land constrained urban infill markets.”

159-169 Studley Court includes two modern industrial facilities and adjoins CIP’s existing asset at 179 Studley Court, creating a 4.0ha continuous landholding in inner west Melbourne. The acquisition will be the ninth asset in CIP’s Derrimut sub-market, collectively worth $229million

43-49 Wharf Road adjoins CIP’s recently acquired 51-65 Wharf Road, Port Melbourne and creates a 1.0ha landholding in one of Melbourne’s most tightly held industrial markets. Additionally the site provides a short WALE and is considered under rented, providing near term value-add upside.

8 Hexham Place adjoins CIP’s recently acquired 160 Newton Road and 164-166 Newton Road assets, creating a 5.3ha landholding in a land constrained and highly sought after central western Sydney industrial market. The asset holds a short WALE and additionally provides near term value-add through positive rental reversion.

590 Heatherton Road is leased to Canterbury Windows and Doors and builds on CIP’s southeast Melbourne portfolio which includes nine assets worth $866million.

5/243 Bradman Street sits within the Westridge Industrial Park in the urban infill market of Acacia Ridge. The site is leased to a high quality tenant in Lincoln Sentry. The asset is considered under-rented and with a mid-term market rent review provides opportunity to capture positive rental reversion in the short term.

CBRE’s Jason Edge and Rory Hilton were the agents for the Campbellfield transaction; Jack Pershouse as well as Jason-Edge facilitated the Wetherill Park transaction; and Stephen Adgemis, David Aiello and Ben Hegerty facilitated the Clayton South transaction.

Colliers International’s Jack Kelliher was the agent for the Port Melbourne transaction.

The acquisitions increase CIP’s total portfolio to c.$4billion and will be funded by new and existing debt facilities.