Centuria Industrial inks $180.9m deal with Morgan Stanley
Centuria Industrial REIT, Australia’s largest listed pure-play industrial fund, has inked a real estate partnership with an investment vehicle sponsored by Morgan Stanley Real Estate Investing (MSREI).
The partnership, known as the Centuria Prime Logistics Partnership (CPLP), will see the MSREI vehicle acquire a 50 per cent stake in eight CIP-owned prime-grade industrial assets for $180.9 million.
The transaction reflects a divestment yield of 4.7 per cent and enables CIP to bolster its balance sheet by reducing debt and gearing while retaining exposure to the strategic assets. One of the assets is at 95-105 South Gippsland Highway in Dandenong South, Melbourne.
It comes as the industrial property market ends another busy year with demand rising for storage and warehouse capacity. Many companies are leasing warehouses to stockpile essential items amid the global supply chain issues.
The latest report from Savills says rents are tipped to rise amid the competitive tension for industrial stock in a low vacancy environment.
However, industrial land prices are increasing, and with materials and labour in short supply combined with escalating building costs – the development cycle will be extended, the report says.
“Vacancy averages less than 1 per cent in many markets and this is keeping intense pressure on new development take-up rates, suggesting substantial rental growth will continue in 2023,” the report says.
CIP’s fund manager and head of industrial Jesse Curtis said the deal will build on the sale of 30 Clay Place, Eastern Creek NSW for $34.5million with CIP having recycled $215.4million worth of assets this financial year.
“The formation of this partnership demonstrates the resilience of CIP’s portfolio and the continued demand for high-quality industrial assets within urban infill markets in which CIP operates,” Curtis said.
“Establishment of this partnership, along with other recently completed divestments, demonstrates CIP’s ongoing commitment to prudent capital management and portfolio optimisation.”
CPLP properties have recently benefitted from value-add strategies and are underpinned by strong tenant covenants. CPLP will solely invest in industrial property, leveraging the sector’s strong tailwinds.
Centuria joint chief executive Jason Huljich said the partnership expands the existing relationship with MSREI, having established the pure-play healthcare real estate vehicle, Centuria Prime Partnership, in May 2022.
“Our access to diverse property sectors continues to present opportunities for us to increase the institutional capital that is seeking to partner with Centuria,” Huljich said.
