182-198 Maidstone was the ninth asset divested by ESRI-lLogos REIT since June (Image: ESR-Logos REIT)
ESR-Logos REIT is selling a logistics facility outside Melbourne, Australia to alternative asset manager Fife Capital for A$65.5 million ($42.75 million), as the Singapore-listed trust continues to sell down peripheral assets.
The trust’s manager on Wednesday announced that it has agreed to sell 182-198 Maidstone Street, a 37,862 square metre (407,543 square foot) warehouse in Melbourne’s Altona suburb at a 7.4 percent premium to its A$61 million valuation at the end 2023, with market sources who spoke with Mingtiandi identifying the buyer as the real estate focused Sydney player.
“The net proceeds from the divestment will be deployed to repay outstanding borrowings, finance potential acquisitions, asset enhancements initiatives and redevelopments and/or fund general working capital requirements,” the manager said in an SGX filing the next day.
With the deal expected to conclude during this quarter, it will mark the REIT’s ninth asset sale in 16 months, with the manager having raised roughly S$450 million ($332 million) through the divestments. The asset sales are part of ESR-Logos REIT’s strategy to dispose of non-core assets and focus on building a quality portfolio through asset enhancements, redevelopment and acquisitions, according to a February statement by the trust’s manager.
Melbourne Leasing Picks Up
ESR-Logos REIT is selling the Maidstone Street asset for A$1,730 per square metre of net lettable area, with the property fully leased to private port cartage and warehousing firm Arrow Logistics.
ESR-Logos REIT chief executive Adrian Chui
ARA Asset Management’s Cache Logistics Trust had purchased 182-198 Maidstone Street in 2019 for S$41.2 million. With that SGX-listed REIT later renamed as ARA-Logos Logistics Trust, the property becoming part of the ESR-Logos REIT portfolio following the trust’s S$1.4-billion merger with ESR-REIT in 2022.
Located west of the city’s central business district and about 20 minutes’ drive from the Port of Melbourne, 182-198 Maidstone Street is part of a burgeoning industrial and logistics hub in Altona.
During 2023 car maker Toyota launched an A$150-million revamp of its former assembly plant in Altona, with Aussie logistics solutions provider Team Global Express unveiling a new purpose-built logistics facility in the area last year.
During 2023 industrial leasing activity across Melbourne tenants leased 2 million square metres of logistics space in the Victorial capital, which represented nearly half of the national total, according to Savills.
Logistics properties across Greater Melbourne recorded average vacancy of 2.4 percent in January after average net face rents for prime facilities in the area rose by 0.5 percent during the fourth quarter, compared to the preceding three months.
Fife Likes Sheds
Led by Australian father and son, Allan and Ben Fife, Fife Capital invests in real estate opportunities across Australia and Asia, according to its website, acting on behalf of institutions, retirement funds and private capital sources, while also providing investment advisory and property management services.
Working across the region, the firm has partnered with global institutional investors for acquisitions in the past, including maintaining a minority stake and serving as a manager of a 20-asset Australian industrial and logistics platform it co-owns with PGIM Real Estate and Manulife, after the partners teamed up to buy out Blackstone’s majority shareholding in the venture during 2021.
Fife Capital had not responded to inquiries from Mingtiandi by the time of publication. CBRE, which marketed the property on behalf of ESR-Logos REIT, declined to comment on the transaction.
Raising Cash
Offloading the Victoria warehouse will leave ESR-Logos REIT with 71 properties in Singapore, Australia and Japan worth nearly S$5.1 billion, which will be 7 percent less by value compared to the 81-asset S$5.5 billion portfolio it held at the end of June 2023, before the selling spree.
Last October, the trust sold an industrial facility at 2 Tuas South Avenue 2 on the west coast of Singapore for S$53 million, booking a 35 premium to the property’s valuation.
That divestment came shortly after it sold a portfolio of seven assets in Australia and Singapore for a combined S$337 million in late June, five of which were picked up by Hillhouse Capital.
The divestments, together with the S$300 million it raised through a private placement of units in February 2023, help the trust to further lower its gearing while also providing capital for potential fund future acquisitions.
In its 2023 financial report released in February, the trust manager touted ESR-Logos REIT’s low gearing level of 35.7 percent as of 31 December, with the company at the time having debt headroom of S$775.5 million.
“The successful initiatives undertaken in FY2023 to recapitalise via the equity fund raising, recycle via the divestment of non-core assets and rejuvenate via AEIs (asset enhancement initiatives) and redevelopments, have fortified our balance sheet and portfolio, and we now stand well positioned to capture growth opportunities amidst the stabilising interest rate environment,” Adrian Chui, chief executive officer and executive director of the manager, said in the financial statement.
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