Gateway Capital buys into Sydney’s Eastern Creek as it seeds $800m fund

Gateway Capital has bought 12 Kangaroo Avenue, Eastern Creek from Blackstone for $75m.

Funds house Gateway Capital is making its presence felt in the industrial and logistics sector, with its new core vehicle it aims to eventually grow to $800m snapping up a Sydney site from private equity giant Blackstone for $75m.

The company’s Gateway Capital Industrial and Logistics Partnership, set up with capital backing from top institutions, has bought in Eastern Creek in line with its focus on east coast markets, which have been attracting capital.

The once boutique fund house is moving fast as some larger players are caught up selling to meet redemptions or to cut balance sheet gearing. But, more players ranging from locals like Centuria Capital and Corval to offshore players Box Capital and Cabot Properties have been buying.

Gateway Capital is targeting opportunities in areas which are forecast to benefit from strong tenant demand on the back of the growth of e-commerce, along with other structural tailwinds which are supporting the industrial and logistics sectors.

The GILP has been seeded with two assets, 9-15 Chilvers Road in Sydney’s Thornleigh, which was recently developed by Gateway Capital, and 655 Sommerville Road in Melbourne’s Sunshine, for a combined $111m. The seed assets provide 31,033sq m of gross lettable area, leased to strong tenants such as CSR, TLE and Select Hire.

Gateway Capital co-funders Stuart Dawes, left, and Peter McDonald.

The latest purchase in Sydney was at 12 Kangaroo Avenue in Eastern Creek. The asset comprises 20,861sq m of prime space, leased to Keuhne & Nagel, one of the world’s top logistics providers. It last traded for $46m in 2019.

The deal took total assets in GILP to $186m, with a strong allocation to Sydney of over 82 per cent. The transaction was introduced to Gateway Capital by Michael Wall from Savills.

Gateway Capital chief executive Stuart Dawes was bullish about the new fund.

“The establishment of GILP targeting core assets complements the existing Gateway Capital funds that focus on core-plus and value-add opportunities, and as such provides Gateway Capital with a broader scope to seek attractive acquisition opportunities,” he said.

He said buying in Eastern Creek added to the GILP portfolio and provided an additional exposure to the key Sydney market while securing a new relationship with a leading global logistics provider.

Gateway Capital chief investment officer Peter McDonald said the acquisition was another example of the company acquiring modern and functional buildings well below replacement cost.

“The Australian industrial and logistics market will continue to be powered by strong population growth well into the future. This western Sydney precinct ranks within the top quartile of locations in Australia with regards to future population growth and improving road infrastructure, two of the biggest valuation drivers in our market,” he said.

Gateway Capital specialises in developing and actively managing core assets in the industrial and logistics sectors and works with institutions on its strategies. It had about $1.4bn of assets under management at the end of June.