ESR have confirmed their acquisition of the interests of its Fund investors in the old Propertylink Australian Industrial Partnership II for $302.5m. The portfolio includes 11 assets primarily located in the eastern seaboard cities of Sydney, Melbourne and Brisbane.
The properties was originally acquired by Propertylink in on behalf of investors in Propertylink Australian Industrial Partnership II fund, whose principal investors were the Townsend Group (on behalf of the Korea’s National Pension Service) and the Norinchukin Bank.
With the addition of these assets, the ESR Australia Logistics Partnership (EALP) portfolio now includes 36 properties with GFA of over 500,000 sqm. EALP was seeded with 21 income-producing assets and 19.4 ha of land to develop core product
Following ESR’s takeover of Propetylink in 2018, the Fund transitioned across to the ESR management platform. At that time, the Fund held 14 assets in Sydney, Melbourne, Brisbane and South Australia, with a total AUM of $325 million.
The complexities of the Propertylink takeover meant that those Funds’ may not have continued to satisfy the requirements of a Managed Investment Trust (MIT) resulting in the non residential withholding tax being higher than the MIT withholding tax rates. The transaction now removes that potential.
The assets included;
- 2 Costello Pl Seven Hills NSW
- 98 Kurrajong Ave Mount Druitt NSW
- 27 Frank St Wetherill Park NSW
- 495 Victoria St Wetherill Park NSW
- 205 Fairfield Rd Yennora NSW
- 12A Rodborough Rd Frenchs Forest NSW
- 55-65 Sky Rd Tullamarine VIC
- 7 Viola Pl Brisbane QLD
- 17 Sugarmill Rd Meeandah QLD
- 41-57 South Centre Tullamarine VIC
- 130 – 138 Link Rd Tullamarine VIC
Australian Property Markets News first revealed details of the transaction early this week and sought comment from ESR on the deal.
Phil Pearce, CEO of ESR Australia, said, “This transaction represents a great outcome for our investors in both investment vehicles and our business. The PAIP II investors achieving an exit in line with the fund’s original strategy, while EALP is able to add a quality portfolio of assets with a strong weighting to preferred markets of Sydney, Melbourne and Brisbane to its existing portfolio.
“The fact that our investor in EALP was inclined to add PAIP II assets to the EALP portfolio reflects the value we’ve added through our active management strategy. I’m pleased to be retaining these assets and have the opportunity to continue to manage them.”
“We’ve also made significant progress with EALP, our flagship logistics fund. In just over six months, we’ve closed on target equity and grown assets to over $1 billion.”
Further value and GFA has been added to the EALP portfolio with the addition of another income-producing asset via development. ESR Australia has developed a facility for SUEZ Recovery and Recycling Pty Ltd at ESR Sherbrooke Industrial Estate in Queensland, one of the land parcels in EALP’s seed portfolio. The development reached Practical Completion this week and represents the first project to be delivered for EALP. ESR Australia is also developing a circa 13,000 sqm speculative facility on the estate.
ESR Australia recently announced the sell down of the remaining 35% of its stake in EALP. This transaction has now concluded, supplying capital for the acquisition of these additional assets. ESR Australia held 17% of PAIP II, which will be reinvested as part of its 20% stake in EALP.
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