GPT Group snares Ascot Capital portfolio in $800m move

GPT Group has won the contest for the latest big-ticket industrial property offering, splashing out more than $800m for a portfolio of from WA-based Ascot Capital.

GPT Group chief executive Bob Johnston. The company presents its results on Monday after winning an $850m portfolio. Picture: James Croucher

The listed GPT Group has won the contest for the latest big-ticket industrial property offering, picking it up from WA-based Ascot Capital, splashing out more than $800m to secure the 28-strong portfolio.

Property companies are dramatically upping their exposure to the sector as values soar on the back of consumers switching to buying online, with big players saying that lockdowns are driving a permanent shift away from malls.

GPT has paid a premium price that reflects both the portfolio’s scale and the competition from rivals Charter Hall and superannuation fund backed manager ISPT, which shied away from paying up after a series of record-breaking deals in the area.

The portfolio will add to GPT’s $3bn industrial property empire and comes ahead of the company reporting its half-year results on Monday, when it is expected to emphasise its commitment to growing in logistics.

The Bob Johnston-led GPT has forged deeper into industrial property as it offers growth prospects while its retail portfolio, which includes large malls like Melbourne’s Highpoint is stranded, and the company has unsuccessfully tried to offload centres including Wollongong Central.

The price outlaid for the Ascot portfolio topped expectations as it includes some regional assets and suburban office buildings in WA.

The sale was handled by investment bank Morgan Stanley and real estate agency CBRE. GPT declined to comment on the transaction but will come under scrutiny from analysts at the release of its results on Monday.

In June, Ascot Capital became the latest company seeking to cash in on the logistics boom, putting the industrial and office properties on the block.

The area is running hot and has been rerated by both the growth of e-commerce and global interest in local warehouses as e-commerce takes off.

Australia’s e-commerce penetration rate of 12.3 per cent is also still low relative to comparable developed economies and is forecast to increase to 20 per cent by 2025, further supporting logistics real estate tailwinds and sector leader Goodman Group has pointed to even this level eventually doubling.

The Ascot offer included 24 industrial and four office properties right across Australia with a 9.2 year weighted average lease term.

The process was designed to tap the global giants who missed out on the $3.8bn Milestone portfolio that private equity group Blackstone this year sold to Asian logistics firm ESR.

The properties span more than 200,000sq m and spin off $36m in net operating income. More than 70 per cent of the income is from industrial properties which are supported by strong tenant demand, capital inflows and capitalisation rate compression.

The portfolio sports a blue-chip tenant register, with 71 per cent leased to listed companies, government entities or multinational corporations

The office properties are fully leased to government tenants and offer a lease term of 9.2 years but the main drawcard was the logistics properties where the average capitalisation rates are still significantly wider than in similar developed economies.

In March, GPT struck up a wholesale partnership with Canada’s QuadReal Property Group to set up the GPT QuadReal Logistics Trust.

The 50:50 venture plans to acquire and develop a high quality portfolio of Australian prime logistics assets with an initial targeted investment of $800m, but sources said the Canadian group saw the Ascot portfolio as too passive in which to invest.

Mr Johnston said when the venture was set up growing the logistics portfolio was a core focus for GPT and the company had made strong progress in securing developments and investments. He said the area was benefiting from structural tailwinds including food and pharmaceuticals distribution and the recovery in the housing market.