News

GROWTHPOINT EXPANDS ITS HIGH QUALITY INDUSTRIAL PORTFOLIO WITH PORTFOLIO ACQUISITION

26 July 2013

Growthpoint Properties Australia (“Growthpoint”) is pleased to announce it has exchanged contracts to acquire three industrial properties to be developed, located in prime industrial markets in Melbourne, Victoria for a total consideration of $60.2 million1. The vendor and developer is Australand Property Group, one of Australia’s premier industrial developers. The assets provide an excellent investment opportunity for Growthpoint and will increase its investment weighting to the industrial property sector. Following completion of these acquisitions and their development, Growthpoint’s property portfolio will comprise 47 properties with a total value of approximately $1.7 billion.

Key metrics of the acquired properties1:

  • Total cost: $60.2 million2
  • Weighted average initial yield: 8.0%
  • Weighted average lease expiry (“WALE”): 7.7 years
  • Weighted average rent increases: 3.5% per annum
  • Occupancy: 100%3

The acquisitions comprise:

  1. 12,800sqm industrial development, located in the Key Industrial Park at Lot 45 Atlantic Drive, Keysborough, Victoria currently under construction. The total cost is $17.3 million (excluding transaction costs), providing an initial yield of 7.5%. The building is expected to be completed in February 2014, from which time it will be 100% leased to Symbion Pty Ltd, a major Australian pharmaceutical company on a 15 year lease with four options of five years each. A deposit of 10.0% of the total purchase price has been paid with the balance payable on practical completion. Completion is subject to a number of conditions including finalisation of several construction matters.
  2. 17,834sqm industrial development located in the Key Industrial Park at 19 & 20 Southern Court, Keysborough, Victoria comprising two buildings to be constructed. The total cost is $18.8 million4 (excluding transaction costs), providing an initial yield of 8.25%. Australand will provide a 5 year rental guarantee from practical completion (expected to be February 2014) for any part of the building not leased at practical completion. Growthpoint has agreed to acquire the land and entered a development agreement with Australand to develop the buildings on a fund through basis. Growthpoint will receive a coupon of 7.50% per annum on all amounts paid until practical completion.
  3. 25,728sqm industrial development located in the Access Altona Industrial Estate at 9-11 Drake Boulevard, Altona, Victoria comprising three tenancy areas currently under construction. The total cost is $24.1 million5 (excluding transaction costs), providing an initial yield of 8.25%. The developer will provide a 5 year rental guarantee from practical completion (expected to be December 2013) for any part of the building not leased at practical completion. Growthpoint has agreed to acquire the land and entered a development agreement with Australand to develop the buildings on a fund through basis. Growthpoint will receive a coupon of 7.50% per annum on all amounts paid until practical completion.
To find out more download the full ASX announcement and the Acquisition presentation.

Notes:
  1. As at practical completion of the development of the properties, excluding transaction costs.
  2. Excludes transaction cost.
  3. Includes five year rent guarantee from Australand at two properties.
  4. A negative yield adjustment leading to a higher purchase price applies if the buildings are let for more than 5 years by a yield reduction of 0.07% for each additional year above 5 years up to a maximum increase of 0.35% for 10 years or more.
  5. A negative yield adjustment leading to a higher purchase price applies if the buildings are let for more than 5 years by a yield reduction of 0.07% for each additional year above 5 years up to a maximum increase of 0.35% for 10 years or moren extra.