Port Adelaide Distribution Centre expected to fetch $220m

Melbourne property firm Quintessential is gearing up for a bumper profit on the sale of its Port Adelaide Distribution Centre, which is set to hit the market.

Port Adelaide Distribution Centre.

Melbourne-based property developer and investor Quintessential is gearing up for a bumper profit on the sale of its Port Adelaide Distribution Centre, which is set to hit the market in the coming weeks.

Quintessential paid Stockland $80m to buy the expansive 32ha property in 2019, and has since expanded and upgraded facilities across the site, including most recently investing $19m into two new warehouses.

Industry sources suggest the property – one of the largest single-ownership industrial estates in Adelaide – could fetch offers of around $220m.

Colliers and CBRE will begin a formal campaign next month, which is expected to generate interest from local institutional investors and offshore groups.

Quintessential chief executive Justin Mills declined to comment on price expectations, but said he expected strong interest from both local and offshore players given the scale of the property and its proximity to the major AUKUS defence hub around the Osborne shipyards.

“It’ll be really interesting to test the depth of the market and see where foreign capital and domestic capital goes to,” he said.

“We’ve built some new (warehouses), we’ve taken the rents there from around $55 a metre up to about $90 a metre on the old stock, and then on the new builds (two warehouses) ... both of those are 100 per cent leased.

“It’s been a fantastic, strong asset that will continue to benefit from big infrastructure spending and the defence spending.

“But I think for our investors, and a lot of investors across the board, they’re seeking liquidity. We’ve given them long, stable income over the last six or so years, we believe we’ve added good capital value, and it’d be a great time to deliver what they want, which is a liquidity event.”

The 32ha land-holding features more than 175,000sq m of improvements across 13 freestanding warehouse facilities.

Quintessential tested the market in 2022 after securing packaging giant Visy for a 44,000sq m lease at the industrial site in 2021. Other tenants include SET Logistics and Ameropa Australia.

The boutique fund manager has been active in Adelaide’s office and industrial markets in recent years. It completed a $30m revamp of the former Commonwealth Bank headquarters on King William St late last year, and is putting the finishing touches to a $30m upgrade of the former Telstra tower on Pirie St.

Mr Mills, who joined Quintessential late last year following stints with Vicinity and Parkstone Funds Management, said both of those properties were more than 50 per cent leased following 8000sq m of leasing deals over the past four months.

He said Adelaide remained a “core market” for Quintessential and its counter-cyclical approach.

“We’ve had a fairly good run here,” he said.

“A lot of the institutions don’t really look at Adelaide ... we see great value, good tenant depth, to get in, regenerate, do good deals with tenants, and add a lot of value.

“If we’re successful in the campaign of selling PADC, I think there’s great opportunity in industrial – there’s not much space, supply is very tight and vacancy is very low.

“Even from an office perspective, I think the market and the yields that you can buy assets at represent really good value. From a macro perspective, there’s very little supply coming on, an increasing talent pool with less people leaving South Australia and more people coming to South Australia - it bodes really well for Adelaide.”

Originally published as Port Adelaide Distribution Centre expected to fetch $220m