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EG’s New $800m Fund Buys Distribution Centre

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EG’s new $800 million fund has made its first acquisition, a $36 million distribution centre in south Sydney.

The Sydney-based fund manager acquired the 15,955sq m industrial centre, located about 30 minutes from the Sydney Airport, on an initial yield of 5.8 per cent.

The vendor, ASX-listed distributor Dicker Data, has entered into a $2.1 million annual leaseback arrangement with EG while Dicker builds a new, 70 per cent larger, distribution facility on a neighbouring site.

Dicker Data chief executive David Dicker said that the initial leaseback arrangement with EG is for a period of 2 years with an option to extend if required.

Dicker acquired the 230 Captain Cook Drive asset for $6.5 million in 2007 and picked up the adjacent 17-hectare block at 238 Captain Cook Drive for $18 million in 2016.

The open-ended Australian Core Enhanced Fund was announced in June with a mandate to target underperforming office, retail and industrial assets.

The fund launched with $800 million in equity commitments from four institutional investors and is targeting an additional $500 million in investment over the next 12 months.

Related: REITs Boost Coffers as Investor Appetite Ramps Up

▲ Dicker has sold 230 Captain Cook Drive (pictured) for $36m, funds will go toward the construction of a new facility and to pay down debt.
▲ Dicker has sold 230 Captain Cook Drive (pictured) for $36m, funds will go toward the construction of a new facility and to pay down debt.


Savills second quarter industrial briefing recorded significant uplift in industrial land values of more than 60 per cent in some pockets of South Sydney.

According to the Savills, development of industrial supply in Sydney returned to pre-GFC levels over the last 12 months, with a notable increase in leasing activity in Sydney’s industrial sector.

EG fund head Daniel Farley said that newly-constructed Kurnell facility is located within a “gentrifying” precinct with strong tenant demand.

“We are strong believers in the underlying drivers behind the broader industrial market and this asset is perfectly positioned to benefit given the short leaseback period,” Farley said.

Meanwhile, Dicker shares wobbled earlier this month — falling more than 16 per cent on 31 July and prompting a price query from the ASX.

Dicker responded that the $36 million sale of the distribution centre was kept strictly confidential.

“The share price is a function of the market and out of the control of the board,” Dicker said in a note to the ASX.

The IT distribution business experienced a huge uplift in its share price over the last year, rising from 2.99 in August 2018 to closing out at $5.46 on Monday.

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Article originally posted at: https://theurbandeveloper.com/articles/egs-new-800m-fund-makes-first-acquisition