Goodman Sells 3 Melbourne Industrial Properties to Singapore’s FLCT for $42M

Frasers Logistics & Commercial Trust has agreed to acquire three newly completed industrial properties near Melbourne for A$61 million ($42.5 million), as the REIT continues to spend cash obtained from the disposal of a Singapore commercial complex earlier this year.

The trio of properties at 1, 11 and 17 Magnesium Place in the suburb of Truganina, Victoria are fully leased to four tenants, FLCT’s manager said Friday in a release. The seller of the assets is West Industry Park Pty Ltd, a project developed by Australia’s Goodman Group.

The deal comes a few months after the Singapore-listed trust, controlled by Thai billionaire Charoen Sirivadhanabhakdi, sold the Cross Street Exchange office and retail development to Hong Kong’s PAG for S$810.8 million ($603 million).

“This investment marks a continuing deployment of our divestment proceeds from the sale of Cross Street Exchange in Singapore and will provide FLCT with further exposure to the attractive Melbourne logistics and industrial market,” said Robert Wallace, CEO of the trust’s manager.

West Side Story

The properties in Truganina, about 20 kilometres (12.4 miles) west of Melbourne’s central business district, comprise three buildings completed last month with a total lettable area of 25,089 square metres (270,056 square feet). Goodman had secured packaging supplier and personal protective equipment supplier Signet to lease all 8,225 square metres at 17 Magnesium Place in June of last year, according to a local media account.

The same account identified Goodride Tyres as leasing 1 Magnesium Place, with FLCT naming LED lighting distributor Stedi and construction supplier Stoddart as the other occupiers of the properties.

FLCT will be paying roughly A$2,431 ($1,698) per square metre of lettable area to complete the deal, likely by the third quarter of 2022. The acquisition will increase logistics and industrial exposure to 66.3 percent of the trust’s portfolio value from 66 percent previously. The freehold assets have a weighted average lease expiry of 6.6 years and will benefit from fixed annual rent increments of 3 percent, FLCT’s manager said.

The Melbourne West industrial precinct saw total take-up of 205,690 square metres in the first quarter of 2022, well above the 10-year quarterly average of 119,130 square metres, the manager said, citing JLL research.

News of FLCT’s latest industrial investment comes after the REIT announced a deal last month to acquire a freehold commercial property in Mount Waverley, a suburb east of Melbourne, for A$60 million. The purchase of the office building, whose tenants include Bank of Melbourne and food giant General Mills, was funded with the proceeds from Cross Street Exchange.

Shed Action Down Under

As of March, FLCT had an interest in 102 industrial and commercial properties — including 61 in Australia, 29 in Germany and the rest in Singapore, the UK and the Netherlands — with a total portfolio value of S$6.7 billion.

The trust last dealt in Australian sheds when it sold a leasehold property in Port Melbourne for A$42.5 million in a deal announced this past December.

That same month, private equity giant Blackstone acquired a 49 percent stake in the $2.5 billion Dexus Australia Logistics Trust, a joint venture holding 77 properties in the country’s major cities, from Singapore sovereign wealth fund GIC. The deal came after Blackstone sold its Milestone Logistics portfolio of Aussie assets in April to a joint venture of GIC and industrial specialist ESR for $2.9 billion.

Another fund manager, US developer Hines, announced its first Australian logistics acquisitions in April of this year, picking up three properties in Sydney and a fourth in Brisbane for $156 million on behalf of the core-plus Hines Asia Property Partners fund.