Dexus to Buy Australian Industrial Assets for $120M

In separate transactions, the Sydney-based investment vehicle will add facilities totaling 762,600 square feet in Victoria and New South Wales to its portfolio.

37-39 Wentworth St. in Greenacre, New South Wales. Image courtesy of Dexus

Dexus Australian Logistics Trust will soon enhance its holdings with the acquisition of two assets totaling approximately 762,600 square feet. DALT, 51 percent of which is owned by Sydney-based real estate group Dexus, has arranged to purchase the Ford Facility at Merrifield Business Park in Mickleham, Victoria, and 37-39 Wentworth St. in Greenacre, New South Wales, in separate transactions at a combined price of A$173.5 million (approximately $120 million).

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“It is a competitive market for logistics/industrial assets, and we are both participating in on-market sales processes like Merrifield as well as being directly approached with opportunities like Greenacre, which was an off-market transaction,” a spokesperson with Dexus told Commercial Property Executive.

Ford Facility at Merrifield Business Park. Image courtesy of Dexus

DALT will purchase the 22-acre Ford Facility project in a transaction structured as a fund-through development. The seller is Merrifield Business Park, a joint venture between of MAB Corp. and Gibson Property Corp., which recently inked a 10-year prelease with Ford Australia. The tenant will use the 555,400-square-foot building, which includes 9,600 square feet of office space, as its national distribution center for spare parts. Texco is spearheading construction of the purpose-built facility and expects to complete the project in August 2021.

DALT also entered a contract to acquire 37-39 Wentworth, an approximately 207,200-square-foot property leased to Real Dairy Australia and Tomkin. The modern cold storage and ambient facility occupies a 10-acre site roughly 10 miles outside Sydney’s central business district and is currently under expansion, with an additional 64,000 square feet scheduled to deliver in February 2021 to accommodate Real Dairy’s growth needs. DALT bought the asset from a private investor.

Each of DALT’s individual investors—including Singapore’s sovereign wealth fund GIC, a frequent Dexus partner that recently increased its stake in DALT to 49 percent—will fund their respective share of acquisition costs. Dexus will rely on existing debt facilities to fund its stake.

Allure of Australia’s industrial sector

Both the Ford Facility and 37-39 Wentworth are in line with DALT’s acquisition mandate, an objective that centers on the acquisition of quality, well-leased assets that generate favorable returns and move the company’s total industrial exposure closer to its $5 billion goal. The global pandemic has not altered the game plan. “We review and reassess our strategy and investment plans on a regular basis and will continue to do so. At this stage there are no material changes to our strategy,” the Dexus spokesperson said.

The industrial & logistics sector has emerged as the most resilient of the core commercial property sectors in Australia, according to a July 2020 report by JLL, and the sector is expected to continue to thrive in the post-COVID-19 environment due in no small part to the emergence of new demand sources. “A structural increase in the e-commerce penetration rate supports the underlying demand for the industrial and logistics sector,” as noted in the JLL report. “Furthermore, an evolution in Australia and New Zealand’s industrial policy could lead to the onshoring of higher value manufacturing activities.”

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