Woolies distribution centre sells for $160m

Logos and partner Ivanhoe Cambridge have bought the Woolworths regional distribution centre in Sydney’s west.

Industrial property group Logos is backed by Macquarie Group

Macquarie Group-backed industrial property group Logos and investment partner Ivanhoe Cambridge have struck a deal to buy the Woolworths regional distribution centre in the Sydney suburb of Minchinbury for about $160 million.

The move, flagged by The Australian last November, boosts the Logos portfolio in the western Sydney industrial market and reinforces offshore interest in the local assets.

Ivanhoe, a Canadian heavyweight, also invests in Australian office towers and, like Macquarie Capital, has an equity investment in the $2 billion Logos business.

The newly-acquired asset will go into the unlisted Logos Australia Investment Venture, which has recently approved a $500m capital investment in Australian prime industrial real estate with a focus on value add opportunities.

The Minchinbury property is the fourth asset to be purchased by LAIV, adding to existing holdings in Sydney, Melbourne and Brisbane.

Logos joint managing director Trent Iliffe said the property was critical to Woolworths’ supermarket supply chain network and the firm was committed to buying assets in key logistics markets which provide the opportunity to deepen its supply chain relationships, including with Woolworths. The Logos venture has several more properties under review as it still has “significant” buying capacity. It is looking at properties ranging from greenfield sites, through to assets with short to medium-term redevelopment opportunities. “We are continuing to see good relative buying opportunities in the core logistics markets on the eastern seaboard of Australia, where we can add value in the short to medium term, providing solid risk adjusted returns for our capital partners,” Mr Iliffe said.

The property at 69 Sargents Road, Minchinbury, is a 88,555sq m facility on a 21.4 ha site and is integral to Woolworths’ national supply chain network, servicing 180 supermarkets across Sydney. It has ambient and temperature controlled areas, full drive-around truck access, a substantial hardstand area and fully automated high clearance warehouse. The asset, sold by Lend Lease’s APPF Industrial Fund, was chased by local and international groups due to the strong covenant of Woolworths and its near five-year weighted average lease expiry.

The deal was brokered by Colliers International national directors Gavin Bishop and Tony Iuliano. “Minchinbury is regarded as an institutional investment-grade location, well-supported by major corporates including Aldi and Startrack Express. The area has limited land supply and a strong institutional and owner-occupier ownership structure which provides sound fundamentals for investing,” Mr Bishop said.

Logos has developed warehouses spanning more than 100,000sq m in western Sydney, worth about $300m, and has the second-largest industrial development pipeline nationally after Goodman Group, with $1.3bn slated to be built over the next three years. Much focus has been on the keenly contested Sydney market. “Sydney has benefited from significant government infrastructure commitment over recent years, which has created challenges and opportunities for investors and users alike,” Mr Iliffe said.

Logos has also been striking major deals in China as it bulks up its international operation. Ivanhoe Cambridge and US-based CBRE Global Investment Partners have committed to investing in its Logos China Logistics Venture.