A MaxCap – Troon Group joint venture acquired a set of four assets from the portfolio
A joint venture between an affiliate of Starwood Capital and Sydney-based Arrow Capital Partners has divested a portfolio of seven logistics properties near Sydney and Melbourne for A$166.8 million ($110 million), after average prime net face rents of Australian industrial and logistics properties grew over 50 percent over the last three years, according to Colliers.
The properties, which the partners had put up for sale in April 2023, were sold in a series of transactions to buyers including ASX-listed Lendlease and a joint venture between local property firms MaxCap Group and Troon Group.
“The Sydney and Melbourne-centric assets encompassed various asset profiles, including long WALE, value-add, and core plus, and generated significant interest from an assorted range of domestic and global investors,” said Gavin Bishop, head of industrial and logistics capital markets at Colliers Australia, which advised on the transaction alongside CBRE.
The disposals come after transactions of Australian industrial property reached A$865 million in the first quarter, representing a 36 percent increase from a year ago, according to Cushman & Wakefield.
The Diverse Nine
Miami-based Starwood and Arrow Capital acquired the properties in 2021 from Australian real estate private equity firm Altis Property Partners as part of a broader portfolio of nine logistics and three office assets worth over A$760 million at the time.
Kurt Wilkinson, founding partner of Arrow Capital Partners
The logistics portion of that portfolio, which comprises assets situated near Sydney, Melbourne, Brisbane and the Hunter Valley area of New South Wales, were said to be worth over A$280 million when they were put on the block, according to local media accounts.
Dubbed the “Diverse 9” portfolio, the logistics assets have a combined gross lettable area of 106,814 square metres, with 69 percent of the portfolio’s net passing income weighted to Sydney, according to marketing documents seen by Mingtiandi. Seven of those nine properties have been sold to date.
Last month, a joint venture between Apollo Global Management-backed MaxCap Group and Melbourne-based developer and investment manager Troon Group acquired four properties situated in the Cheltenham suburb of southeastern Melbourne, with market sources indicating the assets changed hands at a total price of A$73.2 million.
The properties – 270-276 Bay Road; 1-7 Brixton Road; 31-33 and 41-43 Wangara Road; and 2, 4 and 6 Brixton Road – span 10 buildings with a combined gross lettable area of 34,246 square metres. MaxCap Group and Troon Group intend to redevelop the properties as part of a A$400 million development pipeline.
“The large landholding, flexible zoning and established location lend the site to higher and better uses via retail, childcare, warehousing, and self storage, Simon Hulett, head of direct investment at MaxCap Group said in a release last month. “Leaning into the complexity of the underwriting strategy is where we have been able to unlock value. The ability to de-risk various future uses combined with demonstrable value on the buy attracted strong investor demand.”
In September 2023, Sydney-based developer and builder Lendlease purchased 15 Britton Street in the Sydney suburb of Smithfield for A$47.1 million through its Australian Prime Property Fund Industrial vehicle. The property spans 12,797 square metres of gross lettable area across three buildings.
Other divestitures within the portfolio include 63 Britton Street in Smithfield, which was purchased by a local owner-occupier for A$19.5 million last October, and 11-21 Gardiner Street in New South Wales’ Hunter Valley region, which was acquired by local firm Livingstone Property Group for A$26.9 million in July 2023.
Record Low Vacancies
Two properties in the portfolio – 2 Simblist Road located in Sydney’s Port Botany area and 165 South Pine Road near Brisbane – remain unsold, with market sources estimating the waterfront container loading logistics facility at 2 Simblist Road, which has a gross lettable area of 39,996 square metres, to be worth around A$130 million.
Strong demand and tight supply in Australia’s logistics property sector have led to vacancies touching a record low of 0.5 percent last year, while prime rents grew 21.5 percent last year after climbing 18.9 percent in 2022, according to Colliers.
“There’s definitely been a shift in sentiment this year on the back of interest rate stabilisation,” said Bishop. “You’re seeing more investors willing to enter and to participate in the market. The (industrial and logistics) sector will still have continued growth this year, due to very tight vacancy rates and strong rental growth across the market, albeit the market is normalising on the leasing side.”
The disposal by Starwood Capital comes after the private equity firm led by financier Barry Sternlicht teamed up with fund managers Sixth Street Partners and SSW Partners last month to make a non-binding and conditional offer for shares of HKEX-listed ESR Group in a bid to privatise the industrial specialist.
Leave a Reply