Mitsubishi partners with ESR on first Aussie logistics project
Japanese property giant Mitsubishi Estate Asia has made its first investment in Australia’s industrial sector after partnering with global platform ESR on a $175 million estate in south-east Melbourne.
The partners will develop 70,000 square metres of logistics facilities with an end value of $175 million on a 12.1-hectare site at 92 Enterprise Road in Pakenham.
A 12,600-square-metre facility pre-leased to a global textile manufacturer is already under construction and due to be completed early next year. Development of the second stage of Enterprise Industry Park, as it will be known, is expected to start later this year and is available for lease.
Mitsubishi Estate’s Australian boss, Yuzo Nishiyama, flagged the company’s move into logistics in November, telling The Australian Financial Review it was “looking at a couple of opportunities”.
Its partnership with ESR will round out a portfolio that includes investments in luxury apartments with Lendlease at One Circular Quay in Sydney, in land lease housing communities with Stockland and in Mirvac’s growing build-to-rent portfolio.
ESR Australia CEO Phil Pearce said he hoped to grow the partnership with Mitsubishi Estate over time and undertake further logistics projects with them.
“We look forward to a long and fruitful partnership with Mitsubishi Estate Asia,” Mr Pearce said.
“The partnership aligns with the broader ESR Group’s continued focus on lightening its balance sheet and diversifying capital sources.”
Mr Nishiyama said its transaction with ESR was an important milestone in Mitsubishi Estate’s strategic expansion in Australia.
“We are now invested in every key real estate sector including living, office, hotel and now logistics and industrial. Mitsubishi’s goal is to expand further in these key sectors with the valuable support of our trusted partners,” he said.
Enterprise Industry Park will sit within a special purpose investment vehicle 80 per cent owned by Mitsubishi Estate and 20 per cent by ESR, which will also manage the project.
ESR originally acquired what was then a 25.1-hectare site at 92 Enterprise Road for $34 million in November 2021. It sold a 13-hectare portion of it to an owner-occupier – understood to be Caterpillar distributor William Adams – then brought in Mitsubishi Estate as a co-investor on the remaining 12.1-hectare portion.
Greg Hyland and Stuart McCann from CBRE advised ESR while Nathan Parris from Emerge Capital represented Mitsubishi Estate.
Mr Pearce said Melbourne’s south-east was one of the city’s tightest industrial markets in terms of supply of new sheds.
“We’re also getting good rental growth in the south-east, though not like what we were seeing 12 months ago. That growth has moderated, but it’s still positive and above trend,” he said.
