Morgan Stanley Buys Half-Stake in $380M Frasers Aussie Shed Portfolio

The real estate investment arm of banking giant Morgan Stanley has formed a 50:50 joint venture with Frasers Property to invest in an Australia industrial portfolio developed by the Singapore-based firm and valued at A$600 million ($380 million).

The set of eight assets spans 188,000 square metres (2 million square feet) of gross floor area at locations around Sydney and Brisbane, Frasers Property said Thursday in a release. The acquisition of the half-stake by Morgan Stanley Real Estate Investing marks Frasers Property’s first capital partnership in Australia’s industrial segment, according to the SGX-listed firm majority-owned by Thai billionaire Charoen Sirivadhanabhakdi.

After its net gearing reached 86.4 percent at the end of 2024, Frasers Property has sought to raise cash and pay down debt with moves including the recently announced sale of its stake in a northern Singapore mall to a sponsored REIT. Frasers said the newly created Aussie JV aligns with the firm’s strategy to form long-term, strategic capital partnerships to improve returns while maintaining capital efficiency.

“Aligning with like-minded capital partners is crucial to our strategic goals at Frasers Property,” said Frasers Property Industrial CEO Reini Otter. “This collaboration with MSREI allows us to leverage synergies effectively across our extensive industrial portfolio.”

Fully Leased Assets

The JV’s eight-asset portfolio is fully leased by 11 tenants — including logistics operator Primary Connect, flooring supplier National Tiles and housewares giant Williams-Sonoma — and boasts a weighted average lease expiry of 7.7 years and an average age of five years, Frasers said.

The portfolio’s top asset by area is Primary Connect’s 32,350 square metre warehouse at 29 Fairway Street in Gold Coast’s Stapylton area. The 2023-built property sits within 50 kilometres (31 miles) of Brisbane’s airport, seaport and central business district and serves as a hub for the distribution network of retail heavyweight Woolworths.

The other properties include three assets at the Horsley Park Estate west of Sydney, comprising a 16,478 square metre warehouse leased by Williams-Sonoma, a 19,840 square metre facility used by spring water vendor Nu-Pure Beverages and a 9,107 square metre shed for toy and game maker Crown & Andrews.

The transaction between Frasers and MSREI was brokered by Cushman & Wakefield’s industrial team led by Tony Iuliano and Adrian Rowse, as Australia’s shed market stays hot after first-quarter trade volume totalled A$1.9 billion, more than doubling from A$620 million in the year-ago period.

“Australia remains the preferred investment destination within the region, with capital continuing to flow back into the country — particularly into the industrial and logistics sector,” Iuliano said. “While investment activity is becoming increasingly selective, a clear trend has emerged towards newer, high-quality assets located in strategic infill locations as investors adopt a ‘flight to quality’ approach.”

Global Players Keep Coming

Morgan Stanley’s industrial bet comes after Manulife IM earlier this week announced its first direct real estate investment in Australia, with the wealth management unit of the Canadian insurer picking up a logistics park in suburban Sydney.

Manulife IM purchased 243 Forrester Road in North St Marys, also known as Central West Distribution Centre, from a Centennial Property Group fund backed by private equity giant KKR for A$56 million, according to market sources who spoke with Mingtiandi.

The news came less than two weeks after China’s JD Property entered the Australian market by agreeing to buy a Brisbane industrial estate from an ESR vehicle for A$240 million. JD’s deal for the Wacol Logistics Hub followed Canadian titan Brookfield’s February announcement that it had sold a Sydney logistics estate to an Ontario Teachers’ Pension Plan and Korea Investment Corporation fund managed by local industrial specialist Gateway Capital for A$330 million.

During the same week that Brookfield revealed its Sydney sale, fund managers KKR, M&G Real Estate and PGIM Real Estate all announced their own Australian logistics investments.