Property Development

Charter Hall PIF pays Viridian Glass $100 million for Dandenong South industrial investment

Charter Hall PIF pays Viridian Glass $100 million for Dandenong South industrial investment
Written by The ReReport
As seen in the Source link, written by on 2019-11-12 16:43:13


Charter Hall is paying Viridian Glass $100 million for a major industrial investment in Melbourne’s Dandenong South.

The sale and leaseback agreement was struck seven months after Viridian Glass listed its headquarters of more than six decades at 51-95 Greens Road.

Covering a 20 hectare industrial zoned plot, the 77,124
square metre facility is configured with multiple warehouses, offices, ancillary
buildings and a cold store.

It is also designed with drive around truck access and
multiple parking areas.

Viridian Glass offered the property with a lease expiring in 2028.

An aerial image showing the industrial site and portion of land which can be developed (highlighted, red) with 12 months notice.

It agreed to pay a starting annual rent of $5.6 million (with
annual 3 per cent increases) to lease it back.

On that basis, Charter Hall’s Prime Industrial Fund (CPIF)
is acquiring the industrial investment on a 5.6 per cent passing yield.

About 4.1 hectares of the site could be developed without affecting the Viridian tenancy (in the initial marketing material, which included the image above, the building block component was promoted as 3.6 hectares).

JLL’s Tony Iuliano and Adrian Rowse represented Viridian Glass, a business which was acquired last year by private equity firm Crescent Capital Partners for $155 million.

The vendor of the business, CSR, earlier this year sold an 11.3 hectare Ingleburn factory also tenanted to Viridian Glass to Fife Capital for $66.3 million. This Sydney parcel included 2.2 hectares of surplus land which could be developed.

Charter Hall has spent some $5 billion on sale-and-leaseback investments since 2014

Charter Hall Industrial chief executive officer Richard Stacker
said the transaction aligns with is strategy of undertaking sale and lease back
transactions with major private corporates, as well as government entities.

Since 2014, Charter Hall has paid spent some $5 billion on
sale-and-leaseback investments, including with Telstra, Woolworths, Bombardier
Transport, Bunnings, Coca-Cola Amatil, Inghams an Peters Ice Cream.

CPIF fund manager Richard Mason said the Dandenong South transaction
“is consistent with CPIF’s strategy to acquire core industrial and logistics
properties close to major road and rail infrastructure” and which also provides
CPIF “with a significant, well-located, high profile land bank for future

Dandenong and Dandenong South is said to be Melbourne’s
most valuable non-inner city industrial precinct in which to buy or rent.

“Industrial land holdings of this size within core infill
metropolitan locations are becoming increasingly difficult to secure
particularly within the Dandenong South industrial precinct which is currently seeing
strong demand from industrial and logistics tenants,” Mr Mason added.

Following the acquisition
of the Greens Road property, CPIF’s weighting to Sydney and Melbourne
industrial markets increases to 64%.

A substantial development
pipeline will add to the fund’s exposure in these markets.

“CPIF continues to cement its position as one of Australia’s largest unlisted
property funds focussed on the industrial and logistics sector, with the recent
$725 million equity raising giving the fund capacity to grow to in excess of $5
billion” Mr Mason said.

The fund offers investors a high-quality portfolio with attractive 5 year
forecast returns, underpinned by a substantial weighted average lease expiry of
9.8 years, strong weighted average annual rental reviews of 3.0% and resilient
tenant covenants with 93% leased to government, publicly listed or
nationally/globally recognised tenants.

CPIF has delivered annualised total returns of 10.1% over the 3 years to 30
September 2019, 11.2% over 5 years and 10.7% over 10 years, outperforming the
MSCI Mercer Australian Core Property Fund Index which has delivered returns of
9.9%, 10.6% and 9.5% respectively.

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