$1.073b GIC deal makes Australian history
A Singaporean group has made the second largest purchase of industrial property in Asia-Pacific history, buying a $1.073 billion GIC and Frasers Property Australia portfolio that includes the Kmart Distribution Centre at Eastern Creek.
The Ascendas group made the purchase – the largest ever in Australia – after beating four other offshore investors to secure a list of 26 institutional grade properties comprising more than 630,000sqm of modern logistics assets in Sydney, Melbourne and Brisbane.
Seven Australian investors, including LendLease and Stockland, lodged bids but failed to make the final shortlist.
More than 80% of the properties are occupied by ASX-listed or multinational companies including Coles, Toll, Kmart, Nestle and Pacific Brands, while the portfolio has a weighted average lease expiry of 5.7 years.
It is very apparent that investors from around the world remain attracted to the Australian market and are prepared to aggressively pursue the right opportunities
JLL and Colliers International brokered the deal, with JLL’s head of industrial Michael Fenton flagging the potential for more huge deals, with so many large investors unsuccessfully vying for assets.
“We can equate the unsuccessful bidders to an aggregate of $10 billion of unsatisfied demand seeking exposure to Australian industrial assets,” Fenton says.
“Offshore groups are seeking to expand beyond the office, retail and hotels sectors. Australia’s industrial market presents attractive investment characteristics including strong tenant covenants and long weighted average lease expiries.”
The deal means Ascendas is now one of Australia’s largest industrial property owners
JLL head of corporate finance, Chris Keys, says Australia’s favourable financial conditions mean overseas investors will continue to seek assets here.
“We continue to see strong levels of capital allocation by offshore investors into Australia. For institutional investors it remains a core investment destination within the Asia Pacific region and benefits from having a mature and transparent market with sufficient liquidity to access attractive opportunities,” Keys says.
“When looking at the process undertaken on this portfolio it is very apparent that investors from around the world remain attracted to the Australian market and are prepared to aggressively pursue the right opportunities.”