Dexus rides logistics boom

Property heavyweight Dexus is riding the logistics property boom with a big Sydney deal.

Dexus CEO Darren Steinberg. Picture: John Feder

Property heavyweight Dexus is riding the logistics property boom and have struck a major deal in western Sydney as part of the listed company buying up an overall $173.5m worth of assets.

The Dexus Australian Logistics Trust, in which Dexus holds a 51 per cent interest, has bought two industrial properties, delivering on its active acquisition and development mandate with Singaporean fund GIC.

The properties are Wentworth Street in Sydney’s Greenacre and the Ford Facility at Merrifield Business Park in the Melbourne suburb of Mickleham, developed by MAB and GPC.

They were acquired for a combined price of $173.5m. The Dexus share was $88.5m.

The Greenacre property is a 19,246sq m modern cold store and ambient facility leased to Real Dairy Australia and Tomkin. It includes 5950sq m of ­expansion space under development for Real Dairy Australia.

Gavin Bishop and Sean Thomson of Colliers International sold the Greenacre facility.

“This sale emphasises the flight to quality thematic that we are witnessing throughout the COVID-19 pandemic, along with the defensiveness and resilience of the Australian industrial capital markets,” Mr Bishop said.

“Given the current environment, the focus from all investors is high-quality, well-located, income-producing assets with strong covenants; reflected within this sale,” he said.

Mr Thomson said it had been a quieter period but demand was still holding up. “We have seen an almost 50 per cent reduction in transactions across the first half of 2020 in comparison to the same time last year,” he said, noting about 63 per cent of deals had been for A-grade stock, where values had held at the same level as before the COVID-19 pandemic.

The Greenacre asset will have a weighted average lease expiry by income of about 13½ years and will generate a passing yield of 5 per cent, with fixed annual increases of 3 per cent per annum.

Merrifield is a new 51,595sq m prime grade logistics facility currently being developed for Ford Australia as its national distribution centre for spare parts. The site is in an emerging industrial market, strategically located for metropolitan and interstate goods distribution, providing ­direct access to Hume Highway.

On completion, the asset will have a weighted average lease expiry by income of 10 years and will generate a passing yield of 5.25 per cent, with fixed annual increase of 3.25 per cent over the initial lease term.

The acquisitions follow Dexus making more than $1.6bn worth of property acquisitions across the group during the 2020 fiscal year.