Centennial swoops on Cleveland park for new trust

The property funds group believes the industrial park will deliver strong returns. Find out what other properties the group is acquiring in a $100m buy-up.

A new Centennial industrial trust has purchased 19 Enterprise Street, Cleveland

Property funds group Centennial is striking almost $100m worth of industrial deals, with its latest closed-end fund successfully raising about $20m to acquire a 5.6ha logistics facility in the bayside Brisbane suburb of Cleveland.

It picked up the site, anchored by Harvey Norman and Barton Motors at 19 Enterprise Street, from a private vendor in a sale brokered by Colliers and CG Property for $31.2m.

Centennial also recently finalised the purchase of a large industrial site southwest of Brisbane at Tivoli for $35.5m and has two more acquisitions under way that are worth about $65m. Its latest purchase, the Cleveland Industrial Park, takes it to more than $2.4bn under management.

The manager bought the park at a 55 per cent discount to replacement cost and it expects to be able to lift rents as there is a short weighted average lease expiry of 3.1 years. The park has a gross lettable area of about 19,500sq m and is under-rented by more than 20 per cent.

“This acquisition presents strong return profiles, and through an active asset management strategy targeting rental growth based on current and future market forecasts, together with upcoming rental expiries and market demand, we are very confident to be adding Cleveland Industrial Park to our growing asset base,” said Centennial head of portfolio management Nick Lidonnici.

Mr Lidonnici said Centennial was drawn to the Cleveland estate based on its low site coverage, sitting at 39 per cent.

“The site lends itself to multiple value-add opportunities, including the potential to increase gross lettable area by up to 3600sq m through warehouse expansion,” he said.

The new supply of industrial and logistics facilities in the area is trailing tenant demand and Mr Lidonnici said Cleveland Industrial Park would appeal to a broad range of occupiers, including logistics and distribution operators, light manufacturing, food processing and even medical supply companies.

Colliers’ Simon Beirne and CG Property’s Michael Callow jointly brokered the sale.

“Centennial is widely recognised for its hands-on management and leasing capabilities and ability to turn around underperforming properties, particularly in the mid-space, urban I&L (industrial and logistics sector),” Mr Beirne said.

Mr Callow said the site was in a tightly held industrial corridor in the growing Redlands area and, coupled with the site’s short leases, showed “all the right indicators in delivering positive rental uplift through value-added opportunities”.