Gateway Capital Buys Blackstone Sydney Shed to Help Seed $524M Fund

Sydney-based Gateway Capital is aiming to assemble a portfolio of A$800 million ($524.4 million) in Australian industrial assets and has kicked off the fund with the acquisition of a warehouse in Sydney’s western outskirts from private equity titan Blackstone.

The newly launched core vehicle, Gateway Capital Industrial and Logistics Partnership, targets assets in areas expected to gain from tenant demand linked to e-commerce growth and other structural tailwinds, said the investment manager backed by Britain’s Grosvenor Group. GILP’s seed portfolio also includes another Sydney asset and a Melbourne property.

Gateway purchased 12 Kangaroo Avenue in Eastern Creek from Blackstone for A$75 million, bringing the fund’s total assets to A$186 million. Gateway co-founder and CEO Stuart Dawes said the acquisition would provide exposure to the key Sydney market while securing a new relationship with the 20,861 square metre (224,546 square foot) property’s tenant, Swiss freight forwarder Kuehne & Nagel.

“The establishment of GILP targeting core assets complements the existing Gateway Capital Funds that focus on core plus and value add opportunities, and as such provides Gateway Capital with a broader scope to seek attractive acquisition opportunities,” Dawes said.

Chasing Population Growth

GILP’s other assets, 9-15 Chilvers Road in Sydney’s Thornleigh suburb and 655 Somerville Road in Melbourne’s Sunshine suburb, have a combined value of A$111 million. The two properties provide 31,033 square metres of gross lettable area to tenants including CSR, TLE and Select Hire.

Kuehne & Nagel opened the build-to-suit facility at 12 Kangaroo Avenue in November 2014 as part of the Eastern Creek logistics hub. Located near a junction of Sydney motorways, the property features eight loading docks, pick-by-voice technology and radio frequency scanning.

“This Western Sydney precinct ranks within the top quartile of locations in Australia with regards to future population growth and improving road infrastructure, two of the biggest valuation drivers in our market,” said Gateway co-founder and chief investment officer Peter McDonald.

Despite investment volume in Australia industrial real estate falling 37 percent year-on-year to A$2.4 billion in the second quarter, the Sydney market remained the key driver, accounting for nearly half of all industrial activity in the year to date, according to MSCI.

First Partnership Closed Out

Launched in 2021, Gateway managed A$1.4 billion in assets as of the end of June, a month that saw the firm sell a five-asset logistics portfolio for a combined A$135 million.

Gateway sold the collection of properties across Queensland and Victoria to a mix of private and institutional investors, according to sources who spoke with Mingtiandi, with fund manager Irongate picking up an industrial estate in Queensland’s Hemmant for A$46.6 million as the largest deal in the batch.

Gateway exited the five assets to close out its first partnership. Two additional properties, 9-15 Chilvers Road and 655 Somerville Road, were carried over to the recapitalised vehicle that became GILP.