Logos Property has inked a deal to purchase a 15.2 hectare (152,000 square metre) site in the Sydney area from Melbourne-headquartered logistics firm Toll Group for A$200 million ($143.27 million), according to a statement from the company.
The logistics investment and development specialist now says it will redevelop the site into an A$200 million logistics and distribution estate.
“The acquisition includes a partial leaseback to Toll over a portion of the site, with Logos to undertake upgrade works across their existing facilities,” the developer said in a statement. “Logos plans to re-develop the remaining 11.3 hectares of the site into a logistics and intermodal estate on a speculative basis with an estimated on completion value of circa $200 million.”
The deal is Logos’ third major deal in the Sydney area since the beginning of 2018, as regional warehouse developers continue to expand their presence in Australia.
Picking Up a Western Sydney Site
The latest addition to Logo’s New South Wales portfolio is located at 246 Miller Road in the western Sydney suburb of Villawood, occupying a site which has five freeway entry points within 10 kilometres and also benefits from access to the South Sydney freight railway line.
The company expects that the acquisition will allow it to capitalize on future infrastructure development in the area, and to service demand from its existing clients, as well as to find new tenants in the area, said Darren Searle, who joined Logos as its head of Australia and New Zealand in August of last year.
The price of the property was not disclosed, but a 29,603 square meter industrial estate in 120 Miller Road — 1.4 kilometers away from Logos’ site — went for A$54 million in October of last year, while a 15,302 square meter industrial site in South Granville (7 kilometers away) went for A$24.2 million, according to a 2019 CBRE report.
Logos Expands Aussie Portfolio
The deal, to be completed in late 2019, will be implemented through Logos Australia Investment Venture (LAIV), $500 million fund established in late 2016 by Logos and Canadian real estate investment firm Ivanhoé Cambridge to invest in logistics assets across Australia.
This is LAIV’s sixth acquisition, and Logos’ fourth project with Toll Group, for which it previously developed three facilities.
Logos’ Australia-New Zealand portfolio includes assets in New South Wales, Victoria, Western Australia, Queensland, and Auckland, with a total development pipeline of A$2 billion.
The government of New South Wales, where Sydney is located, is investing close to A$80 billion in infrastructure in the western side of that city in the next four years. Major projects in the pipeline will include the construction of two-predominantly underground motorways, and upgrades to the area’s existing road systems under the A$3.6 billion Western Sydney Infrastructure Plan.
Building an ANZ Portfolio
Logos has shifted its Australia strategy into high-gear as it battles with Blackstone and Warburg Pincus-backed ESR for a limited supply of industrial sites near the country’s major cities. This year, stable demand and lower availability of sites drove yields in Sydney below five percent for the first time since at least 2008, according to data from real estate consultancies.
Logos invested in three projects in the western Melbourne suburb of Truganina in the middle of last year. In August, it completed the purchase of a 77,000 square metre GLA (829,000 square foot) Kmart distribution center in the for A$119 million ($86 million). Just a month before the company acquired a site at Infinity Drive, a few hundred metres from 285 Palmers Road, and in June it bought a 27.5 hectare (275000 square meter) industrial site for a reported A$28 million.
The firm has also made a number of recent purchases in Sydney, where in August Amazon established a 43,000 square metre fulfillment centre — the e-commerce giant’s second in the country.
In March, the company struck a deal with local e-commerce fulfillment firm eStore Logistics to develop a A$25 million warehouse in Sydney. The land where the warehouse will be located is part of a 20.4-hectare site in Hollingworth Road Logos acquired for A$40 million in 2016, according to the Australian Financial Review.
In that same month, the firm announced the acquisition of a 4.4-hectare warehouse South Sydney for A$72.4 million from a syndicate of 22 private owners that had bought the site for A$26.2 million ten years before, according to the same publication.
Growing Competition for Aussie Assets
Some of the largest private equity firms are also beefing up their Australian industrial portfolios as Logos zooms into Melbourne and Sydney. Warburg Pincus-backed ESR snapped up two major industrial developers last year, including Australia based Charter Hall’s Commercial & Industrial Property for A$102.5 million ($76 million) in July, and Propertylink for $522.52 million –a deal which was finalized this Wednesday.
Blackstone, for its part, made a A$33 million bet in December by acquiring for A$21.5 million a 10,220 square meter building in the western Sydney suburb of Blacktown, (currently leased to paint manufacturer Valspar), as well as paying A$11.5 million to acquire a 4.5 hectare Melbourne site, currently leased to steel manufacturer Bluescope.
Blackstone was the largest acquirer of Australian industrial property in the 2018 fiscal year, gulping up 21 assets for a total of A$1.15 billion, according to JLL.