Australian Unity Fund Offloads Richlands Site for $85m


Australian Unity’s Diversified Property Fund has sold an industrial holding at Richlands for $85 million.

The industrial estate at 278 Orchard Rd on an 11.26-hectare block with up to 18,000sq m of warehouse space was sold to Dexus Australian Logistics Trust.

The property fund had owned the warehouse and industrial site since August 2006 and diversified property fund manager Nikki Panagopoulos said the sale had capitalised on strong market demand for well-located industrial assets.

“Industrial property, which currently comprises about 17 per cent of the Fund’s direct property portfolio, has been a stand-out performer since the onset of the pandemic, with demand for warehousing space surging to unprecedented levels in line with growth in e-commerce,” Panagopoulos said.

“The sale of the Richlands property has increased the weighted average lease expiry of the Fund to circa 8.3 years from 8.1 years and augments the Fund’s robust total returns.”

According to a CBRE investor intentions survey industrial and logistics assets were at the top of investor wishlists. The sector was the only one to record an increase in sales volumes last year. Almost half of respondents to the survey said they were willing to pay over the nose for logistics assets.

CBRE executive director of capital markets for industrial and logistics Chris O’Brien said the momentum had gathered in the industrial sector last year and carried over into the first quarter of 2021, resulting in continued yield compression and overall increase in capital value rates.

“The increase in sales volume activity will continue throughout 2021, with a record year expected for industrial and logistics,” O’Brien said.

▲ An 11.26ha industrial site at Richlands changed hands for $85 million. Image: Knight Frank
▲ An 11.26ha industrial site at Richlands changed hands for $85 million. Image: Knight Frank

Three of Australian Unity Diversified Property Fund’s properties were independently valued last month, resulting in a $1.26 million or 1.30 per cent overall increase in the portfolio’s book value.

Panagopoulos said the uplift in value for the fund’s Western Australian assets was the result of strong economic conditions which continued unabated despite the pandemic, with the fund’s industrial asset in Rowville benefiting from an active transactional market.

“Overall, the Diversified Property Fund’s exposure to defensive tenants – from supermarkets and convenience retailers to warehousing across metropolitan and non-metropolitan markets —supported the delivery of stable and consistent returns to investors, despite a challenging twelve months,” Panagopoulos said.

“Our focus for 2021 is to continue to execute on our strong neighbourhood shopping centre development pipeline, while identifying acquisition opportunities for assets that deliver the services our communities need.”

Investors in the Fund will receive a special capital distribution as a result of the sale, which will be paid with the fund’s regular, monthly income distribution payment in July 2021.

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