Logos Continues on Melbourne Tear with $86M Kmart Warehouse Buy

In its third Melbourne deal in as many months, pan-Asian logistics developer Logos Property has acquired a Kmart distribution centre in the city’s Truganina suburb for A$119 million ($86 million).

Logos, which is headed by logistics veterans Trent Iliffe and John Marsh,  purchased the 77,000 square metre GLA (829,000 square foot) distribution centre from US asset management giant Invesco, as regional and global logistics investors step up their deal activity down under.

The project acquisition comes just one month after Logos acquired a 27.5 hectare industrial site in the same community, after buying its first Melbourne project in June. Logos announced the transaction on 7 August in a statement.

Expanding in Shed Hotspot

All three of Logos’ Melbourne properties are in Truganina, about 28 kilometres from the city’s central business district and 23 kilometres from Port Melbourne, with expressway links to the facility via Princes Highway and the West Gate Freeway.

“Truganina is one of Australia’s core industrial locations with many large logistics operators,” said Darren Searle, Head of Australia and New Zealand for Logos. “The Kmart Distribution Centre is a strategic addition to our growing portfolio of core assets within key logistic markets secured by long term cashflow.”

The asset is located at 2-12 Banfield Court on a 14 hectare plot, and is fully leased to Kmart Australia, a subsidiary of ASX-listed Wesfarmers Limited. The property was put up for sale by Invesco, the US investment manager, via a global expression of interest handled by JLL and CBRE which closed on 24 May..

Invesco had purchased the property in 2014 for A$94.1 million in what was the largest transaction in the industrial market in the fourth quarter of that year, according to JLL.

The weighted average lease to expiry (WALE) at the location is 7.9 years, and the asset was generating income of $6.5 million net a year at the time of sale. The initial yield is 5.45 percent, according to a report in the AFR.

Third Deal in Three Months

This latest deal comes after Logos acquired a 27.5-hectare site at 285 Palmers Road, about 2.6 kilometres from 2-12 Banfield Court, in early June for a reported A$28 million. The company intends to develop a 160,000 square metre warehouse on that property, which was purchased from the Adrianakos family in a deal brokered by Cushman & Wakefield.

In July, Logos acquired a site at Infinity Drive, a few hundred metres from 285 Palmers Road.

The company, founded in 2010 and active throughout the Asia-Pacific region, has a total of A$4.2 billion of equity commitments in 15 investments. In February 2018, it established the Logos Australia Logistics Portfolio (LALP) with an initial investment capacity of A$500 million. The 2-12 Banfield Court purchase will add about five percent to the company’s total Australian space.

Searle joined Logos in January and was first employed as Australian Head of Development, before being announced as the company’s head of Australia and New Zealand operations at the same time that Logos unveiled its latest Truganina deal. Searle had previously worked at Toll Group, an Australian logistics company part of Japan Post since 2015, as general manager for property development.

Australia Logistics Competition

The Australian logistics sector is a growing area of focus for regional logiistics players with Logos’ rival ESR having purchased Charter Hall’s Commercial & Industrial Property (CIP) in July for A$102.5 million. The Warburg Pincus-backed logistics investment platform had already taken stakes in real estate investment firm Propertylink and fund manager Centuria Capital, both ASX listed prior to the CIP acquisition.

ESR has told the Australian press that it would form an Australian logistics fund seeded with assets acquired in the purchase of CIP. It has also been working with Centuria on a possible takeover of Propertylink, but as of this week the two were not able to agree on a way forward in that proposed transaction.

Other major players in Australian logistics include the home-grown Goodman Group and Blackstone.