Charter Hall Buys Sydney Logistics Centre from Frasers for $90m

Fund manager Charter Hall has snapped up another industrial asset in Sydney’s south west for $90.5 million, strengthening its push into Sydney’s tightly-held industrial and logistics market.

Charter Hall’s $3 billion Prime Industrial Fund made the acquisition in partnership with the $1.5 billion wholesale Core Logistics Partnership, forming a joint venture to acquire the Coles-leased distribution centre in Sydney’s south west.

Frasers acquired the industrial asset in mid-2016 for $65 million.

Charter Hall said the transaction is supported by an independent valuation of $93 million, while Fraser's JLL-led valuation came back at $88.5 million according to an ASX announcement.

The industrial asset is a 16.7-hectare property located at 80 Hartley Road, Smeaton Grange. The group’s off-market acquisition was made as the Coles distribution centre tenancy entered a new five-year lease extension.

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“This transaction offers our flagship industrial funds a contracted rental of $5.75 million per annum with a 5-year WALE upon lease extension, with multiple releasing and development options in the future,” Charter Hall managing director David Harrison said.

Industrial land yields are at unprecedented lows in Sydney and land values have more than doubled over the last five years. Tenant demand – driven by the ever-increasing e-commerce sector – the growth of infrastructure in south-west Sydney and the new Badgerys Creek Airport continues to push industrial land values to record levels.

The property is strategically positioned with good motorway connectivity and offers a gross lettable area of 61,281sq m with potential expansion from a 37 per cent site coverage ratio.

The asset was purpose-built for Coles’ distribution centre.

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Charter Hall’s newest industrial asset will benefit from major road and rail infrastructure projects that will service the growing population and support the future demands of the second airport at Badgerys Creek.

“The acquisition of this modern, strategically located facility further strengthens Charter Hall’s cross-sector relationship with Coles and Wesfarmers and demonstrates our ability to partner with existing customers across our industrial and retail platforms.

Behind Goodman Group, Charter Hall is the second largest owner of industrial property in Australia. Its industrial funds under management now exceed $6 billion.