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Property investment manager Centennial has teamed up with boutique industrial developer Pirrama Capital Partners to acquire a 6.9ha landholding at St Marys in Sydney’s west with plans to develop the site into a $102 million-plus industrial precinct.
The property, located adjacent to the St Marys Intermodal Terminal, has been acquired from a private vendor for $32.15 million.
The partners ae proposing to develop the site into two new industrial warehousing facilities and an eight-lot industrial subdivision with the project aiming to capitalise on what they say is latent demand from tenants seeking new warehousing space ranging from 3,500sqm to 12,000sqm.
Centennial has funded the acquisition through a single, closed end syndicate, the Centennial Interlink Logistics Estate Trust, which the group says closed at its $27 million target.
The trust is anticipating an internal rate of return of about 25 per cent over its 30-month term.
"The flexibility in exit options for investors was a key driver in the fund successfully raising capital in such a short period of time," says Centennial's head of capital Alex Edwards.
"The development of our new St Marys Interlink Logistics Estate offers investors extremely attractive total returns and a clear exit strategy by delivering differentiated product into an already established and expanding industrial and logistics precinct."
Centennial has a portfolio of 63 assets in the industrial, office, retail and boutique residential sectors, and oversees more than $2.7 billion in funds.
Centennial's CEO Paul Ford says the joint venture with Pirrama Capital Partners is a “strategic development services partnership” which is the first of many planned between them.
“We're looking forward to an ongoing relationship with them ... they've developed some tremendous projects, particularly in Sydney's west,” says Ford.
"With Interlink, we intend for a quick sell down of the industrial lots that command premium street frontages on Lee Holm Drive.
"Demand for industrial subdivisions particularly in the smaller lot category is intensifying, and it's a sector we're looking very closely at.
"A pre-sales and leasing campaign will commence prior to construction start, with sell-down of the eight-lot subdivision and, the built form anticipated, within three to six months after practical completion.
“We're confident in outperforming the estate's forecast value of $102 million."
Pirrama Capital Partners (PCP) was founded by industrial development and equity funds specialists Jonathan Herb and David Ruston, who have collectively transacted and developed $3.5 billion of industrial projects.
"PCP’s business strategy is to source development opportunities, leverage experience and sector expertise and de-risk projects by finding value in overlooked sites, all of which, are common threads shared by Centennial,” says Ruston.
"PCP and Centennial are strongly aligned to the industrial property sector and as a development partner, we'll leverage the St Marys site's prime western location by tapping into our own strong connections, particularly in Sydney's western industrial sector."
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