Australian Unity Picks Up Industrial Estate for $48m


Australian Unity’s unlisted Diversified Property Fund has acquired an office and warehouse in the Osborne Naval Shipyard in South Australia for $48.25 million.

The 8,000sq m property, located at 620 Mersey Road in Osborne, is currently leased to Australian Naval Infrastructure—wholly-owned by the federal government—until 2030.

Branded the Centre of Defence, the warehouse and office-campus styled property sits on a 2.5-hectare parcel of land 21 kilometres north west of the Adelaide city centre.

It also included is 3,000sq m of vacant land, earmarked for the development of two additional office buildings totalling 6,000 square metres.

The building was listed in September after the vendor, Prime Space Projects, engaged CBRE to conduct an expressions of interest campaign.

The property was designed by Woods Bagot and constructed in 2010.

In October, Australian Unity’s unlisted fund tapped investors for $50 million to partially fund its $100 million development pipeline and acquire more real estate.

The unlisted property fund owns eleven assets in Australia across retail, office and industrial sectors, worth about $526.5 million in total.

Australian Unity said the acquisition had been funded using a combination of the fund’s equity and existing debt facility, which currently has $80 million of undrawn debt.

Fund manager Nikki Panagopoulos said the acquisition presented investors with a mix of high-quality office and industrial property with a blue-chip tenant.

“The fund owns defensive income producing assets, many of which have been expanded and improved over the last five years in line with community demand.

“This has proven to be an effective way to maintain consistent returns for investors as well as supporting valuations during a challenging 2020,” Panagopoulos said.

The naval yard acquisition will bolster the fund’s weighted average lease expiry to eight years and further diversify Australian Unity’s portfolio.

Other assets in the fund’s portfolio include a 53,000sq m distribution centre on the outskirts of Brisbane with Myer as the anchor tenant, two more shopping centres in WA, and a twin Caltex service station complex on the Central Coast.

The fund’s forecast distribution yield for the 2021 financial year is 6¢ per unit, which represents an income yield of about 5.8 per cent.

In April the fund offloaded a six-level, A-grade property in Melbourne in Carlton for $72 million—a 20 per cent premium to its last book value—to a subsidiary of one of Japan’s largest companies, telecommunications giant Nippon Telegraph & Telephone Corporation.

That asset traded on a yield of just under 5 per cent.

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