Wealthy players offloading Woolworths distribution centre to Elanor in $200m exit

Funds house Elanor is in the frame to buy the long-time complex used the supermarket giant in Melbourne and could revamp the property.

Two wealthy property players are close to selling the Woolworths distribution centre and a neighbouring property in the southeastern Melbourne suburb of Mulgrave to funds house Elanor Investors Group, which has gone into exclusive due diligence.

The funds company is looking to capitalise on the last mile logistics boom with a repositioning of the combined property – which was put on the block by Harry Stamoulis and Dug Pomeroy, who own different parcels – for about $200m.

The best known part of the site at 508-550 Wellington Rd is the Woolworths state office and distribution centre, but only a relatively short term remains on its lease, opening the way for a repositioning of the 23.23ha property.

The pair stand to gain from the big switch into last mile facilities as Mr Stamoulis picked up his 19.1ha section for $90.75m in 2017 and the Pomeroy bought the remainder of the two years later for $30.5m.

Elanor and agents Dawkins Occhiuto have declined to comment on the transaction, which would mark another move by the listed company as it is also chasing the purchase of a major Brisbane tower.

Elanor sets up unlisted trusts and partnerships to hold the assets it manages, and has been on the expansion trail after this year winning the backing of Middle Eastern powerhouse the Abu Dhabi Investment Council and buying Challenger’s Australian real estate funds management business that controls a $3.4bn empire.

The infill site is in one of Melbourne’s most tightly held and densely populated areas. It spins off a net passing income of $6.15m per annum and 3.2-year weighted average lease expiry provides holding income while development options are explored.

It has been occupied by both Woolworths and Renold Australia since the 1970s, and is in demand for both traditional distribution centres and last mile logistics. The property sports access to both the Monash Freeway and EastLink, and the broader city transport network.

The 522-550 Wellington Rd property is occupied by Woolworths, which has its warehouse, as well as a freestanding substantial two-level head office, with two detached departments. The buildings offer the potential for repositioning and value-add plays.

The 508-520 Wellington Rd property comprises Renold’s head office, factory and distribution centre. The single storey office space fronts Wellington Rd, with a factory to the rear. The property has about 18,000sq m of surplus land to the rear that can be developed.

Other big players are also active in the last mile logistics sector, which is transforming cities, with the heavyweight Funds SA awarding a $350m mandate to the specialist fund run by HMC Capital. The company wants to grow to $1bn worth of assets in the area.

Urban Logistics Co, backed by private equity real estate firm Wentworth Capital and US giant BlackRock Alternatives, is also aiming to double its holdings to $2bn.

Local and Singapore-based fund manager Hale Capital Partners has dramatically expanded in the area since being set up in 2021 by industry veterans Robert McMickan and Nicholas Bradley, and is on track to manage $4bn of assets.