27-43 Toll Drive near Melbourne is among the New LAIVS Fund properties
Some 10 months after partnering with Singapore’s ARA Asset Management, Sydney-based Logos Property has achieved one of the major goals of that link-up with a S$404.4 million ($300 million) transaction announced today.
In a two-part deal, ARA Logos Logistics Trust (ALOG), a Singapore-listed REIT which has been managed by Logos since ARA acquired a controlling stake in the developer. has agreed to acquire a set of five warehouse properties near Brisbane, Australia from Logos, as well as making a S$178.5 million investment in a pair of the company’s funds.
“This is a transformational acquisition for ALOG as it expands our footprint across key economic hubs in the East Coast of Australia and paves the way for our next chapter of growth under LOGOS’ sponsorship,” said Karen Lee, who took over as CEO of the manager of ARA Logos Logistics Trust after Daniel Cerf’s retirement in August of this year.
The set of transactions, the first to be announced between the two entities since Logos joined ALOG in the ARA universe, provides the developer and fund manager with the type of exit opportunity envisaged when it joined forces with the Warburg Pincus-backed investment manager in a deal which was formally announced in March of this year.
Buying Up Brisbane Sheds
Under the terms of agreement, ALOG, which was known as Cache Logistics Trust before the ARA-Logos deal, is acquiring a total of 364,352 square metres (3.9 million square feet) of logistics space from the Aussie-managed firm, including one cold chain facility measuring 28,550 square metres.
ARA Logos Logistics Trust CEO Karen Lee
In return for the five asset portfolio, which includes four properties near the Port of Brisbane and a fifth south of the city centre, ALOG has agreed to pay S$225.9 million, which is equivalent to S$620 per square metre of space.
The fully occupied properties, which are leased to tenants including Woolworths, Visa Global, Allied Seafreight and Lineage Logistics, among other businesses, have an average weighted term to lease expiry (WALE) of 11 years, according to documentation filed by ALOG with the Singapore stock exchange. The four port area properties have all been developed on a leasehold basis, with at least 39 years remaining on their terms, while the inland facility is a freehold asset.
“The outlook for Australia’s industrial market remains stable over the long term, underpinned by the fundamental role of logistics in keeping basic day-to-day necessities of Australians in supply, unprecedented infrastructure investment and growth in defensive downstream industries such as e-commerce,” ALOG’s manager said in a statement.
Public REIT Invests in Private Funds
Alongside its asset acquisitions, ALOG is paying S$178.5 million to buy up a 49.5 percent interest in New LAIVS Trust and a 40.0 percent interest in Oxford Property Fund, a pair of Logos vehicles which together own a set of five logistics properties in Australia’s New South Wales and Victoria states.
Following the set of fund transactions, New LAIVS Trust will be 50.45 percent owned by Ivanhoe Cambridge, with the Canadian pension fund manager holding a 54.6 percent interest in Oxford Property Fund. Logos will retain a 5.4 percent interest in the Oxford vehicle.
New LAIVS Trust owns 100 percent of the equity in 69 Sargents Road in Minchinbury and 11-14 John Morphett Place in Erskine Place near Sydney as well as owning one facility each in the Melbourne suburbs of Altona and Altona North. Oxford Property Fund owns 1 Hume Road, a cold chain facility in Melbourne’s Laverton North satellite.
Together, ALOG’s manager indicated that the two transactions are being achieved at a blended yield of 5.0 percent on a net property income basis, with the combined portfolios averaging 97 percent occupancy.
Logos Invests in S-REIT
As part of the set of transactions, Logos, which acquired 10 percent of ALOG in December of last year as part of its acquisition by ARA, will be expanding its holding in the Singapore-listed REIT by subscribing to new units to be issued in the trust.
Under a preferential offering established in conjunction with ALOG’s investments, Logos will subscribe for up to approximately S$18 million worth of new units to be issued in the REIT, as well as backstopping the entire preferential offering.
Ivanhoe Cambridge will also join the equity deal with a pledget to subscribe to up to S$70 million of the new ALOG units.
In the deal announcement ALOG’s manager said that it intends to fund the acquisition, apart from its own acquisition fee, with the proceeds from the unit sales to Ivanhoe Cambridge and Logos, separate private placements of new units to other investors, sales of equity to other existing unit-holders and external bank borrowings.
Combined, the acquisitions and fund investments would increase ALOG’s deposited property value by 28.2 percent, from around S$1.3 billion to S$1.7 billion, while upping the Australian portion of the trust’s portfolio to 47.6 of its total holdings.
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