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Two Australian property investment groups have struck separate deals totalling $346 million in partnership with US investors, giving them control of four high-growth industrial assets in Western Sydney.
Property funds manager Centuria Capital Group (ASX: CNI) has wrapped up a $201 million deal for three warehouses in partnership with US-based real estate investment group BGO.
The transaction has been announced on the same day that Melbourne’s Cadence Property Group announced a partnership with US-based investor PGIM Real Estate to acquire a last-mile logistics and infrastructure asset, the St Mary’s Intermodal Terminal, from Pacific National for $145 million.
The Centuria Capital deal brings about 45,000sqm of prime industrial space into the BGO joint-venture portfolio following an off-market deal for the three warehouses which are located at Smithfield and Seven Hills.
The deal firms up Centuria’s position as one of the largest industrial landlords in Australasia comprising more than 160 assets valued at $6.2 billion.
The Florida-headquartered BGO, which is part of the Sun Life Financial group, has more than $100 billion in assets under management.
The group, which is supported in Australia by Cliffbrook Capital, has been exploring opportunities to increase its exposure to domestic urban infill industrial markets.
The properties acquired, 28 Britton Street and 45 Britton Street, both at Smithfield, and 17 Stanton Road in Seven Hills, have been identified for their potential to capture strong rental growth.
“We are elated to partner with BGO for the first time and will continue to seek opportunities across tightly held industrial markets to grow the partnership,” says Centuria’s joint-CEO Jason Huljich.
“This type of institutional partnership speaks to the strong appetite from international capital seeking to harness the strong domestic industrial sector tailwinds, particularly within infill markets which benefit from proximity to households and businesses alike.”
Centuria will be investment manager and property manager of the acquired assets. It will hold a 5 per cent interest in the portfolio, with BGO’s investment valued about $190 million.
Cadence Property's first partnership with PGIM
Meanwhile, Cadence Property Group’s acquisition at St Mary’s represents the group’s first partnership with PGIM.
The St Marys Intermodal Terminal, located at 2 Forrester Road, occupies a 15.76ha site with a gross lettable area of 95,940sqm, including a 1.5 km rail spur and a planned 20,000 sqm hardstand expansion.
The acquisition has been accompanied by a new 20-year lease with existing tenant ACFS Port Logistics. The partners plan to begin construction of the 20,000sqm hardstand expansion as part of the new lease.
“This was a unique infrastructure-aligned asset that presented an opportunity to work with the sitting tenant to expand the asset and create value for all parties,” says Charlie Buxton, CEO of Cadence Property Group.
“Managing the purchase, lease and planned expansion works simultaneously required creativity and a high level of execution - both of which play to the strengths of our team and integrated business model. We’re also delighted to welcome PGIM Real Estate as a new partner and look forward to building on this relationship.”
PGIM Real Estate, which is headquartered in New Jersey, has more than US$1.39 trillion in assets under management.
“The opportunity to acquire a unique asset like this, with strong real estate and infrastructure characteristics, was attractive to us and the ability to substantially de-risk it by having a long-term tenant in place prior to acquisition added to the appeal,” says Steve Bulloch, managing director and head of Australia at PGIM Real Estate.
“PGIM Real Estate has been very active this year across a range of real estate asset classes, but we have also been very selective in pursuing strategies with a strong underlying thematic and assets that will be well positioned for the heightened market volatility in the near term. This acquisition is another good example of that.”
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