Frasers locks in Morgan Stanley as capital partner in industrial portfolio
The Wall Street investment bank has emerged as a capital partner with Frasers as the Singapore giant steps up the production of big sheds.
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The investment arm of Wall Street bank Morgan Stanley has forged into the country’s hot industrial property market, striking a capital partnership with real estate group Frasers Property over a $600m portfolio.
The move gives Morgan Stanley Real Estate Investing a 50 per cent stake in the portfolio of warehouses across NSW and Queensland, while Frasers Property will take on funds, property and asset management.
The tie-up is a significant play by Singapore-owned Frasers Property, which has traditionally funded the rollout of its own industrial projects and kept them under control on the balance sheet or in its specialist listed trust. But it has substantial expansion plans, which have created the opportunity for it to bring a partner into eight core assets.
The big-ticket tie-up also confirms the industrial and logistics sector as the prime focus of international investors who are targeting Australian commercial property.
Frasers Property Industrial said the move was its first capital partnership in Australia, with the Frasers Prime Logistics Venture established to capitalise on the strong demand for premium industrial estates in key logistics hubs.
The 50-50 joint venture covers a portfolio in the country’s most sought-after areas in Sydney and the Gold Coast. Spanning a total gross floor area of 188,000sq m, the portfolio was valued at about $600m.
It is fully leased, with 11 tenants including Primary Connect, National Tiles, and Williams Sonoma. The portfolio has a strong weighted average lease expiry of 7.7 years, and the assets have an average age of just five years.
The joint venture aligns with Frasers Property’s strategy to form long-term, strategic capital partnerships to improve returns while maintaining capital efficiency.
Frasers Property Industrial chief executive Reini Otter called out the importance of finding a backer that shared its approach.
“Aligning with like-minded capital partners is crucial to our strategic goals at Frasers Property,” Mr Otter said. “This collaboration with MSREI allows us to leverage synergies effectively across our extensive industrial portfolio.
“Our dedication to delivering sustainable and top-tier industrial and logistics assets aligns with MSREI’s objectives, and we look forward to forging a robust, enduring partnership based on our strong pipeline and shared vision.”
Cushman & Wakefield, led by Tony Iuliano and Adrian Rowse, brokered the transaction.
Mr Iuliano, international director, head of logistics and industrial, Cushman & Wakefield ANZ, noted the portfolio’s top quality.
“This portfolio represents a premium-grade offering, developed entirely by Frasers Property – one of the few genuine national developers with a proven track record in delivering institutional-grade industrial assets across Australia,” he said.
The portfolio includes properties at 4 Burilda Close and 6 Burilda Close, in Sydney’s Wetherill Park, as well as 4 Johnston Crescent, 2 Johnston Crescent, and 2A Johnston Crescent in the city’s Horsley Park. It also includes 15-19 Muir Road in the Sydney suburb of Chullora. The Queensland properties are 29 Fairway Street and 24-60 Homestead Drive, both of which are in Stapylton on the Gold Coast.
Frasers Property Industrial managing director, Australia, Ian Barter pointed to the company’s strong development pipeline as it seeks to unlock another $4bn-$4.5bn of assets over the next three to five years.
“With that growth trajectory, we’re embarking on a strategy of aligning ourselves with strategic capital partners,” Mr Barter said, flagging a continued focus on core markets.
The Frasers industrial unit is one of the top operators in Australia, with a portfolio of about 110 properties and a land bank of 2.5 million square meters.
The move comes in the wake of other players locking in industrial partnerships. Stockland in February closed deals worth about $800m in total that will result in US private equity house KKR and British funds giant M&G Real Estate backing its industrial operations.
In October last year, US investment giant TPG Angelo Gordon struck a deal with the listed Growthpoint Properties Australia under which it took a majority stake in about $200m worth of industrial parks.
Just ahead of that deal, two Asian investors committed to take a slice of a $3.2bn prime logistics portfolio run by Asian powerhouse ESR Group, and Japan’s Hankyu Hanshin Properties Corp and a Malaysian fund agreed to pour $536m into owning a slice of an 11-strong portfolio of warehouses.
Originally published as Frasers locks in Morgan Stanley as capital partner in industrial portfolio
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