Centennial, Brookfield Spend $163m on Sydney Logistics

Centennial and joint-venture partner Brookfield Real Estate Secondaries have spent about $163 million of its $700 million fund to pick up two prime industrial and logistics assets in Sydney.

Using its Enhanced Value Partnership fund, the partners have acquired industrial infill sites at Brookvale and Prestons.

The two acquisitions give the fund a foothold in Sydney’s mid-space, urban logistics sector with both sites offering solid passing income, revenue growth and excellent incremental redevelopment opportunities.

“The two assets are a perfect fit for our fund, which recently closed oversubscribed,” Centennial’s executive director Paul Ford said.

“We’ve been really selective in our site choices in Sydney and are very happy with the Prestons and Brookvale sites given their land rich nature along with flexible improvements that align with our niche strategy, focusing on mid-space, urban infill sites within land constrained or last mile logistics areas.”

Conditional contracts have been exchanged on the Brookvale site, comprising two adjoining industrial parks spanning about 42,000sq m at 114 and 120 Old Pittwater Road.

The asset will be acquired from Centuria Capital Group, subject to completion of conditions precedent. The transaction was brokered by Gavin Bishop of Colliers and CBRE’s Chris O'Brien.

Purchased as two separate lots for around $84m, the Brookvale site “affords Centennial flexibility for future redevelopment including the potential to build a multi-storey warehouse to take advantage of Sydney’s critically low vacancy rates”, a spokesperson said.

The multi-tenanted site comprises 29,607sq m of gross lettable area housing a range of blue-chip tenants, including a Woolworths distribution centre, FujiFilm, Padi Asia, and state and federal government departments including the Australian Electoral Commission.

“Another factor in our decision to purchase the site was the draft Brookvale Structure Plan’s new zoning height limits which may be increased to possibly pave the way for a multi-storey warehouse,” Ford said.

▲ The sites at 114 and 120 Old Pittwater Road, Brookvale, and (main image) the Prestons site acquired.

“The asset currently has a 40/60 per cent office-to-warehouse ratio with the potential of converting less favoured offices into high-tech and warehouse space to better suit market demand.”

The second site, in Sydney’s south-west, was acquired from Charter Hall for $79m in a deal brokered by Cushman Wakefield.

Comprising 5.3ha at 115-121 Jedda Road, Prestons, the asset contains two large format generic refrigerated logistics facilities, occupied by Primo Smallgoods that sub-leases part of its warehouse to supermarket giant, Aldi.

Centennial property fund head David Cupit said the Prestons site was “extremely well located” next to major road and transport infrastructure networks as well as the under-construction Western Sydney Airport, which is 13km from the site and due to open in 2026.

“It is a high-income producing asset offering certainty of income from a multi-national tenant, along with the ability to create additional GLA,” he said.

“Given the site’s suitability for future development and reconfiguration, we are confident of adding value to the asset and repurposing it into an institutional-grade investment.”

These acquisitions bring Centennial’s total industrial and logistics platform to 68 assets in NSW, Victoria, Queensland and SA for a combined value in excess of $1.5 billion and a development pipeline of about $350m.