Charter Hall Prime Industrial Fund aquires prime 20 ha site in Dandenong South, Melbourne

The Charter Hall managed Charter Hall Prime Industrial Fund (CPIF) has acquired a 20 ha industrial site in the prime industrial precinct of Dandenong South, in south east Melbourne, from Viridian Glass, for $100 million, via a sale and leaseback agreement.

The property, occupied by Viridian Glass since the 1960’s, operates as its national headquarters and is the only site that manufactures glass in Australia, underpinning its strategic importance to Viridian Glass. The property comprises 77,124 sqm GLA, with multiple warehouses, office and ancillary buildings, a small cold store, drive around truck access and multiple parking areas. In addition, the site provides 4.1 ha of expansion land for future development.

As part of the sale and lease back agreement, Viridian Glass will continue their occupation of the property with an 8 year triple net lease, with fixed 3.0% annual rent reviews.

Charter Hall Industrial CEO, Richard Stacker commented, “This transaction with Viridian Glass aligns with our strategy of undertaking sale and lease back transactions with major corporates and government entities. The property was acquired off-market and is testament to our ability to work with corporates to develop customised deal structures that support their broader investment strategies and release capital back into their business.”

“We are delighted to welcome Viridian Glass to our industrial tenant customer base” said Mr Stacker.

Over the past 5 years, Charter Hall has undertaken more than $5 billion in sale and lease back transactions across the platform, including with groups such as Telstra, Woolworths, Bombardier Transport, Bunnings, Coca-Cola Amatil, Inghams, and Peters Ice Cream.

CPIF Fund Manager, Richard Mason said “The transaction is consistent with CPIF’s strategy to acquire core industrial and logistics properties close to major road and rail infrastructure, whilst also providing CPIF with a significant, well located, high profile land bank for future development.”

“Industrial land holdings of this size within core infill metropolitan locations are becoming increasingly difficult to secure particularly within the Dandenong South industrial precinct which is currently seeing strong demand from industrial and logistics tenants” said Mr Mason.

Following the acquisition of the property, CPIF’s weighting to the strongly performing Sydney and Melbourne industrial markets increases to 64%, with a substantial development pipeline that will add to the Fund’s exposure in these key markets.

“CPIF continues to cement its position as one of Australia’s largest unlisted property funds focussed on the industrial and logistics sector, with the recent $725 million equity raising giving the Fund capacity to grow to in excess of $5 billion” said Mr Mason.

The Fund offers investors a high-quality portfolio with attractive 5 year forecast returns, underpinned by a substantial weighted average lease expiry of 9.8 years, strong weighted average annual rental reviews of 3.0% and resilient tenant covenants with 93% leased to government, publicly listed or nationally/globally recognised tenants.

CPIF has delivered annualised total returns of 10.1% over the 3 years to 30 September 2019, 11.2% over 5 years and 10.7% over 10 years, outperforming the MSCI Mercer Australian Core Property Fund Index which has delivered returns of 9.9%, 10.6% and 9.5% respectively.

Tony Iuliano and Adrian Rowse of JLL introduced the opportunity to CPIF.