Stockland seeks partner on $2bn-plus industrial portfolio

The listed property giant is looking to accelerate its rollout of new centres by taking on a big capital partner.

Diversified property giant Stockland is seeking a capital partner for more than $2bn worth of warehouses and logistics centres as the industrial sector continues to run hot with demand for space driving up rents.

The deal is one of the largest commercial property plays of the year and seeks to capitalise on Stockland’s position in the top ranks of industrial property developers in the country.

The listed giant is looking to accelerate its rollout of new centres by taking on a big capital partner, which would first acquire near half stakes in five major centres that Stockland already owns and would also back the development of new projects along the eastern seaboard.

Stockland under chief executive Tarun Gupta is transforming its operation by taking on big partners, enabling it to move faster on larger projects and it has already struck deals on its land lease estates business and for a life sciences business park in Sydney. It is also chasing a capital backer for an office project that will become North Sydney’s tallest tower.

Stockland has a partnership with Japanese firm Mitsubishi Estate Asia across its expanding land lease division and has also taken on Canadian group Ivanhoe Cambridge to back its M_Park life sciences site in Sydney’s northern suburb of Macquarie Park.

The moves are being led by Mr Gupta, formerly a senior executive at Lendlease, which has a model of setting up capital partnerships to back its large-scale projects. The tie-ups help companies get more projects out of the ground in a capital-efficient way and the logistics play will also help Stockland expand into the competitive funds management field.

Stockland has developed some of the country’s best warehouses and distribution centres and it wants to capitalise on both infill sites and those on city outskirts as its position as largest listed residential developer means it has substantial land banks.

An artist’s impression of M_Park, a Stockland development at Sydney’s Macquarie Park.

International pension funds and local super players are chasing a slice of Australia’s industrial property market as the sector is still attractive despite the slowdown that has hit office towers. The area is still seeing surging demand and developers are expanding to keep up, particularly in Sydney, where the bulk of Stockland’s portfolio is concentrated.

The city has experienced world-leading rent growth, both as a consequence of a shift to last-mile delivery centres and as budget-conscious consumers move towards online buying.

The portfolio is being handled by real estate agency CBRE’s Stuart McCann and Chris O’Brien. The agency and the company declined to comment.

The deal is framed as a new industrial and logistics partnership that will target a portfolio worth more than $2bn across major eastern seaboard cities.

The interests in the five super prime logistics estates that have either recently been finished by Stockland or are near completion are worth about $1bn. Then there is a right of first offer over a pipeline of new projects with an end value of about $1.1bn.

Stockland could also take its partner into new projects that suit its ambitions in infill locations and on brownfield sites that it already controls.

The move is partly designed to capitalise on the infrastructure boom in major capital cities, as this is opening up both new industrial land as well as enabling greater density on some existing projects.

It also aligns with the growing desire of large pension funds to have more control over their investments by striking up direct relationships with big companies rather than going into pooled funds.

Stockland’s relatively recent shift into partnerships means that it can offer the tie-up without any conflicts with existing vehicles.

The seed assets include sites in Sydney and Melbourne. Those in Sydney include the Ingleburn Logistics Park, the Leppington Business Park and a redevelopment in Banksmeadow. The seed portfolio also includes Melbourne’s Altona Industrial Estate and Brisbane’s Willawong Distribution Centre. The weighting is more than 70 per cent to NSW.

The future pipeline includes Melbourne’s Brooklyn Distribution Centre and the second stage of Melbourne Business Park. It will also include a redevelopment of a site in Padstow in Sydney. The split shows a slight weighting towards NSW.

Stockland is in the top echelon of developers that are installing top-quality environmental facilities and its deep tenant relationships mean it is already planning next-generation multistorey warehouses.