Goodman Group chief executive Greg Goodman.
A Goodman Group-managed fund has struck a $203.5m deal to sell a Mainfreight-occupied industrial facility in the Sydney to Canadian group Brookfield in a sign of the market’s resilience.
Brookfield is buying the logistics facility at 30-50 Yarrawa Street, Prestons, in southwest Sydney, with the deal taking its platform to $3bn as the market recalibrates amid higher interest rates and slowing rent growth. Brookfield said the acquisition was a compelling investment opportunity in one of Sydney’s most tightly held infill industrial precincts and was secured below replacement cost.
Trent Gallagher of Colliers brokered the off-market deal for the unlisted KWASA-Goodman Industrial Trust. “The combination of scale, a global logistics occupier, a substantial underlying landholding and rental reversion made this a compelling asset for a long-term logistics investor,” he said.
The 45,780sq m distribution facility at 30-50 Yarrawa Street, Prestons is fully leased to transport and logistics company Mainfreight. It occupies an 85,200sq m E5 heavy industrial-zoned site.
The deal reflects an initial yield of 5.26 per cent and a land rate of $2388 per square metre. The property was sold with a 2.6-year weighted average by income, together with a further six-year option to renew.
Mainfreight has occupied the property for about 18 years with its current lease starting in 2014 and expiring in 2029, with a six-year option to renew.
Brookfield said the site was supported by significant structural land constraints, which were expected to further exacerbate the existing supply-demand imbalance, put downward pressure on vacancy rates and underpin strong market rental growth.
The 45,780sq m distribution facility is in a core Sydney logistics precinct next to the M7 motorway and near Sydney’s arterial road networks.
Goodman handled a major expansion of the property, which included upgrading the racking layout, reinforcing its infrastructure, and adding a specialised storage area for dangerous goods.
Brookfield co-head of real estate in Australia, Ruban Kaneshamoorthy, said the acquisition strengthened the company’s Australian logistics portfolio.
“The combination of a substantial landholding, strong transport connectivity and an established global logistics occupier makes Prestons an attractive long-term investment,” he said. “It also reflects our continued focus on acquiring quality logistics assets in markets where industrial land remains tightly held and there is potential for growth.”
BKC is Brookfield’s operating partner on the asset, which it will also manage. BKC also manages Brookfield’s Laverton logistics asset in Melbourne.