Flour giant cooks up $400m industrial deal
Real estate investment firm Qualitas has unveiled one of the country’s largest-ever industrial portfolio deals, snapping up the Allied Pinnacle property portfolio in a sale and lease-back deal worth about $400 million.
The acquisition of the real estate underlying the 10 flour-milling and bakery operations across Australia marks a step up in the institutional arena for Qualitas, which has a 10-year history of tapping investors to back property projects.
The company specialises in both property debt and equity financing and is involved with projects along the eastern seaboard, including apartment and commercial developments.
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It joins US private equity group Blackstone and Singapore’s Cache Logistics Trust as recent buyers of major industrial portfolios.
The new trust signals the group’s ambitions to tap major investors to back larger moves in direct property, where it has tended to work project by project.
Allied Pinnacle, which is owned by private equity firm Pacific Equity Partners, will keep full control of its operations at the sites where it has 30-year, triple-net leases, with the portfolio providing a 6% yield.
Allied Pinnacle has a 100-year trading history and is the country’s largest flour supplier, with a market share of about 40%. It supplies major grocers, industrial bakeries and 2000 small bakers.
Mark Fischer, managing director, principal investments at Qualitas, says the properties represent “core strategic assets of the tenant and provide a national network of irreplaceable production facilities that are critical to the nation’s food supply”.
“The long-term leases provide operating certainty for the tenant and positive returns for investors, as the tenant has a long history and significant market share,” Fischer says.
The underlying real estate is also mainly urban infill land, with most sites in prime suburban locations of major cities.
The properties have been placed into a wholesale vehicle, the Qualitas Food Infrastructure Fund, which won strong investor support, mainly from European and Asian pension and life insurers as well as domestic institutional investors.
“This is a unique offering for investors, as it has elements consistent across real estate, infrastructure and agricultural investments, and brings benefits from each sector,” he says.
“Our thesis is that there is a developing universe of ‘crossover’ investors from each of those sectors who are increasingly focused on what we call soft infrastructure. This delivers long-duration income without the regulatory risk that comes with hard infrastructure or the tenant demand vagaries of traditional real estate.”
The sale was run by Chris O’Brien and Mark Granter of CBRE and Charter Keck Cramer.
This article originally appeared on www.theaustralian.com.au/property.
