Charter Hall backs logistics sector with $115m purchase in western Sydney

Charter Hall grabs $115m logistics property in western Sydney, adding to its $40bn property funds empire.

Erskine Park has several logistics facilities.

The acquisitive Charter Hall is continuing its post crisis surge and has picked up a $115m logistics property in western Sydney, adding to its $40bn property funds empire.

The company believes the logistics sector will come through the widespread resetting of values best as consumers shift to buying more online, and broker JPMorgan on Tuesday called out the demand for industrial and long leased assets in the wake of the coronavirus crisis.

The broker said Charter Hall had 12 vehicles able to deploy capital, helping to counter any asset value declines in offices and shopping centres. Just last week, a Charter Hall fund and Allianz acquired Aldi’s logistics assets in a sale and lease back deal for $648m and the company has now struck again in Sydney.

In the latest deal, the unlisted Charter Hall Prime Industrial Fund and Charter Hall Direct Industrial Fund No.4 bought the property from the Kador Group via an off-market transaction. The asset, at 40-66 Lockwood Drive, Erskine Park, reflected a 4.75 per cent core capitalisation rate.

The distribution facility spans 43,000sq m, of which about 40,000sq m is used for warehousing, with the remainder for offices. It has a site area of 8.273ha with a site coverage of 52 per cent, allowing for future development.

The facility was originally developed in 2008 for the tenant, Winc, as their national distribution centre. Winc have entered into a new 12-year lease to commence at expiry of their current lease in August 2020. The lease provides for annual rental escalations of 3.25 per cent, with a mid-term market review in 2026.

Winc Australia, previously known as Staples and Corporate Express, is a national workspace solutions supplier of office essentials, furniture, safety equipment, IT solutions, toiletries and kitchen products.

“The acquisition of Winc’s Erskine Park facility is consistent with both the Group’s and Funds’ strategy to acquire core logistics properties leased to good quality tenants on long term leases situated in key industrial precincts with access to major infrastructure and transport networks,” Charter Hall industrial and logistics chief executive, Richard Stacker, said.

The deal was brokered by Michael Fenton of Savills and adds to Charter Hall’s $10bn industrial and logistics portfolio. He said the sale reflects the continued strength in the sector relative to other asset classes.

“Investors will continue to focus on the sector, and more so now given the current economic turbulence, with the hallmark of strong, secure, and growing income streams,” he said.