Hines Asia Fund Picks Up 2 Melbourne Logistics Projects

The flagship Asia Pacific strategy of US developer and fund manager Hines has entered Melbourne with the acquisition of two logistics properties from Honda Australia.

A project near the Melbourne airport in the suburb of Tullamarine will be the first major ground-up logistics development for Hines in Australia after Honda vacates the property in early 2024, the Houston-based firm said Thursday in a release. The second property in Campbellfield is a freestanding office/warehouse building.

The two assets are the first in Melbourne for the Hines Asia Property Partners core-plus fund after HAPP previously acquired three logistics properties in Sydney and a fourth in Brisbane.

“Throughout the Asia Pacific region, we are seeing sustained demand for Hines’s next-generation facilities and we intend to strategically invest and deliver this type of product,” said Chiang Ling Ng, chief investment officer for Asia Pacific at Hines. “These new Australia acquisitions are adding further scale to Hines’s growing industrial and logistics platform in the region and help expand our investors’ exposure to the dynamic logistics sector across Asia Pacific.”

Growing Industrial Portfolio

The Tullamarine site at 85-95 Sharps Road leverages a corner location with exposure to Sharps Road and Keilor Park Drive, two key arteries between the airport and the M80 ring road.

The Campbellfield building at 1954-1956 Sydney Road stands opposite a former Ford factory that is being redeveloped into a mixed-use business park with quick-service retail outlets, a childcare centre, a hotel and a conference centre.

With the latest acquisitions — led by the firm’s head of industrial and logistics for Australia, Alysia Reilly — Hines has secured 11 logistics assets in Asia Pacific totalling 633,192 square metres (6.8 million square feet) since 2020.

“Industrial vacancy rates are at record lows and we are seeing double-digit rental growth coming through across most major markets in Australia, which is continuing to drive land values higher, despite inflation,” Reilly said. “These latest acquisitions give us strong geographic diversification across our core East Coast markets and a good balance of secure income and value-add opportunities in the portfolio.”

Best known in Asia for trophy skyscrapers like One Museum Place in Shanghai, as of this year’s first quarter Hines had invested nearly $6.3 billion in the industrial and logistics sector worldwide and completed over 76 acquisitions representing 5.5 million square metres.

Flagship Explores APAC

The HAPP fund, created last year and boosted by a $400 million capital commitment from Canadian pension manager Cadillac Fairview, is a multi-sector, open-ended, diversified vehicle targeting top-tier markets in Japan, Australia, South Korea, Singapore and China (including Hong Kong). HAPP has an initial investment capacity of about $900 million.

Earlier this year, the fund acquired four Australian logistics assets spanning more than 58,000 square metres from investment manager Pipeclay Lawson. Local news reports put the consideration at A$210 million ($156.4 million) for the entire portfolio, representing a net passing yield of 3.4 percent.

Last year, Hines picked up a 17-storey Yokohama commercial tower and a Brisbane office asset on behalf of HAPP.

Founded in 1957, Hines oversees investment assets under management valued at $90.3 billion. The privately owned firm has developed, redeveloped or acquired 1,530 properties totalling over 47.4 million square metres.

Before bringing its top regional fund into the Victorian capital, Hines had already taken on residential and office projects in the city, including buying its second build-to-rent development in Melbourne for a reported A$30 million ($21.6 million) in February.

Earlier this month, the company unveiled plans for its office project at 600 Collins Street in central Melbourne after acquiring that site in 2020.