Blackstone Buys Sydney Logistics Complex From Charter Hall for $39M 

Blackstone has acquired a south Sydney industrial complex from Charter Hall for A$55.75 million ($39.4 million), according to sources familiar with the transaction, as Australia’s logistics real estate market continues to show opportunities for rising income.

Colliers and CBRE, which acted as joint sole agents for the sale of 133 Vanessa Street in Kingsgrove, a suburb 13 kilometres southwest of Sydney’s central business district, announced late last week that the two-building estate had been sold to an unnamed global investor looking to keep the asset for the long term.

Market sources who spoke with Mingtiandi identified that global investor as Blackstone, which snapped up the asset from ASX-listed Charter Hall. Jason Edge, CBRE’s national director of capital markets for industrial and logistics in Australia, touted the property’s prime location within an industrial estate near the city centre and its opportunities for leasing uplift.

“The asset and lease structure allows the purchaser access to significant rental reversion, allowing them to take advantage of the strong Sydney industrial fundamentals, including strong tenant demand, historic low vacancy and ongoing stable rental growth,” Edge said in response to Mingtiandi’s queries on Tuesday.

Value Jumps 50% in Four Years

Trent Gallagher, national director for property sales and leasing with the industrial and logistics division of Colliers, described the property as semi-modern and said it is currently occupied by three tenants with the weighted average term to lease expiry standing at less than a year, opening up opportunities for its new owner to boost rents.

“This is a value-add rental reversion play. The short leases mean the incoming buyer can increase rents,” Gallagher told Mingtiandi on Tuesday via email. He also pointed to the property’s accessibility to central Sydney, in an up and coming industrial hub, as a primary value driver.

“Kingsgrove is a very strong infill location. It’s the first stop off the M5 motorway from Alexandria so it’s a market that benefits greatly from tenant migration moving from South Sydney where market rents for industrial are $500 per metre net and Kingsgrove is more like $300 per metre net,” he added.

Charter Hall had acquired the logistics hub for A$37 million in October 2019, based on previous records from Colliers, putting Blackstone’s acquisition at a more than 50 percent markup from that deal less than four years ago. Colliers and CBRE both declined to comment on the identities of the buyer and seller, while Blackstone and Charter Hall had not yet responded to inquiries by Mingtiandi by the time of publication.

The transaction values 133 Vanessa Street at A$4,255 per square metre of its 13,102 square metres (141,029 square feet) of net lettable area. Average capital values for prime industrial properties Sydney-wide, ranged from A$4,010 to A$5,280 per square metre in the first quarter, based on the latest market report by Colliers.

Underpinning the strong outlook for Kingsgrove, Colliers’ Gallagher said the precinct surrounding 133 Vanessa Street currently boasts zero percent vacancy and remains a tightly held market.

Data from the property agency shows industrial hubs in southwest Sydney accounted for 60 percent of the 118,000 square metres of industrial space leased in the market during the first quarter, with rents inching (2.54 centimetres) upward 0.9 percent during the period, compared to the preceding three months.

Back in the Market

Blackstone acquired its Sydney shed as the firm’s chairman and chief executive Stephen Schwarzman said during the company’s earnings call in January that the firm plans to acquire more properties globally this year.

With more than $65.2 billion in capital ear-marked for deployment under its real estate strategies, the company pledged to snap up more assets in the coming months, including in Asia, where most of its latest real estate fund dedicated to the region remains uninvested.

Blackstone made its Sydney shed buy as the company jostles to acquire Aussie data centre giant AirTrunk, with local media reporting in March that the fund manager had engaged Morgan Stanley and another unnamed investment bank to manage its bid in what is expected to be an A$15 billion transaction.

Should Blackstone succeed in shouldering aside reported rival offers from DigitalBridge, KKR, Brookfield and GIP, it would gain control of AirTrunk’s 11 hyperscale data centres across its home country, Japan, Singapore, Hong Kong and Malaysia which represent more than 1.4 gigawatts of total capacity.