Visy has sold an industrial facility in Sydney's west for more than $17 million to Sandran Property Group, but the packaging giant will stay put under a leaseback agreement.
The 42,210sq m property at 126 Andrews Road, Penrith, is a functional industrial manufacturing facility with associated office accommodation and amenities over two levels.
Visy, led by manufacturing and recycling magnate Anthony Pratt, will continue to occupy the 8,056sq m glass sorting and recycling warehouse, having signed a seven-year leaseback agreement with renewal options, generating a passing annual net income of $1 million.
The deal, brokered by JLL’s Tony Iuliano and Roger Miller along with Colliers International’s Gavin Bishop and Sean Thomson, reinforces the resilience of industrial and logistics assets, with the Covid-19 pandemic highlighting the importance of supply chain networks in providing essential goods and services.
JLL’s Iuliano said demand for Australian industrial and logistics assets remains strong both in Australia and overseas.
"The continued and ongoing growth of e-commerce and low cost of debt will ensure that the industrial sector continues to underpin the strength of the industrial and logistics landscape, not just nationally but globally.
"We are also seeing a number of groups who are now finally open for business and liquidity remains buoyant - in particular sub-$200 million.”
Sandran's purchase of the property for $17,250,000 reflects a
5.79 per cent passing yield, and is a sign of the group's confidence in Penrith’s CBD.
Sandran has approval for a 11,500sq m Bates Smart-designed office building slated to start construction this year at Henry Street and 50 Belmore Street in Penrith.
Sandran managing director William Phillips said the outlook for Western Sydney and Penrith is positive.
"The population fundamentals of Penrith are strong, it's well connected by public transport and major arterial roads and the new Western Sydney Aerotropolis will bring even greater opportunities for employment and growth."
JLL’s Roger Miller said the large land holding at 126 Andrews Road had been extremely sought-after in the Sydney industrial market in recent years.
"With a long WALE of 7.40 years by income, to globally-recognised tenant covenant in Visy, the site presented an outstanding opportunity to acquire a bond-like industrial investment that is set for strong rental and capital growth prospects."
Predictions that the key role industrial property plays in keeping the basic day-to-day necessities of Australians in supply would help see the sector through the Covid-19 pandemic are being borne out by a number of prominent asset sales amid the global health crisis.
Recent earnings guidance from the likes of industrial portfolio manager Goodman Group are further evidence that logistics assets may have weathered the coronavirus storm better than most.