A 60,000 sqm warehouse leased to Fantastic Furniture and DB Schenker has set a new benchmark in Australia after being acquired by Centuria Industrial REIT (CIP) for $200.2 million on a yield of 3.6 per cent.
The record low return eclipsed the 3.62 per cent yield for the 35,000sq m Best & Less distribution centre, which AMP Capital sold to a Lendlease investment platform for $130.1 million in May.
Prime logistics assets in Sydney and Melbourne are now regularly trading on sub 4 percent yields amid the surge in online shopping during the pandemic, which has increased demand for warehouse space.
Centuria’s acquisition of the 60,223 sqm Fantastic Furniture and DB Schenker facility in Fairfield in Sydney’s west was struck at a 48 per cent premium to the facility’s December book value of $135 million
The deal raised CIP’s portfolio of industrial properties to $3.5 billion.
Ross Lees, Centuria’s Head of Funds Management, said the group’s growth strategy was specifically focused on “metropolitan infill sites that are catered to the last mile logistics sector.
“The pandemic has been a catalyst for domestic online shopping, and we believe there is further growth to come across Australasia,” Mr Lees said.
CIP will partially fund its latest acquisition spree – the fund acquired almost a $1 billion of assets in the 2021 financial year – through a $300 million institutional equity raising alongside a $25 million unit purchase plan.