John Swanson+61 404 221 115John.Swanson@au.knightfrank.com

Real estate investment group, Altis Property Partners, snaps up a portfolioof 14 assets for $89 million

Despite a shortage of available stock in the industrial market, a recent deal brokered by Knight Frank has seenAltis Property Partners scoop up 14 industrial assets across three states. The properties in Melbourne, Sydneyand south-east Queensland sold for a total of $89 million. The total land area of the assets is 178,669 sqmand the total building area is 81,892 sqm.

The largest grouping is in Melbourne and is made up of 10 properties with three street frontages along BrixtonRoad, Wangara Road and Bay Road in Cheltenham. In New South Wales, there are two properties inSmithfield and one in Rutherford, and the Queensland property is located in Brisbane’s southern suburb ofCrestmead.

The largest grouping is in Melbourne and is made up of 10 properties with three street frontagesalong Brixton Road, Wangara Road and Bay Road in Cheltenham. In New South Wales, there are twoproperties in Smithfield and one in Rutherford, and the Queensland property is located in Brisbane’ssouthern suburb of Crestmead.

Knight Frank agent, John Swanson, negotiated the deal, with Mr Swanson saying initially, the vendors wereonly looking to sell one property.

I was canvassing one property in Smithfield, and met with the Vendor’s representative, who revealed they hadanother asset in the same street, and before I knew it, a national industrial portfolio along the east coast,” MrSwanson said.

I was canvassing one property in Smithfield, and met with the Vendor’s representative, who revealed

KnightFrank.com.au/SPACE

they had another asset in the same street, and before I knew it, a national industrial portfolio alongthe east coast,” Mr Swanson said.

The properties were sold by two private owners who were looking to take advantage of selling at what theyconsidered to be the height of the market.

Mr Swanson says a particularly compelling feature about this group of assets is the potential for growth andredevelopment. He says, “The assets in Victoria cover quite a significant land area in an emerging market thathas the potential for residential re-zoning. This is a big opportunity to either redevelop the site, or on-sell it, as aDA-approved mixed use development site. In Sydney, with particular focus on 63 Britton Street in Smithfield,this was a significant value add play. The existing building improvements are approximately 6,730 sqm sittingon a substantial land parcel of 2.53 hectares. So there is the ability for a fair bit of up-lift to extend the existingpremises, build another freestanding facility or even subdivide and sell off a reasonable industrial land parcel.”

“The purchase by Altis is also very in-line with the company’s ethos. The core of what Altis buys is commercialand industrial investments, where there is the potential to value-add. Whether that be identifying assets thatrequire some cap ex to create a rental reversion, re-lease on long term lease then on-sell or simply take theview for a medium to long term term hold, package up into another portfolio and take to market” he said.

The sale of the 14 assets represented an initial yield of 8.76 per cent for the whole portfolio, which Mr Swansonexplains is a reasonably high yield in the current market. He says “8.76 per cent is very good compared to theaverage of about 6.5 per cent the market is showing at the moment. We’ve noticed further yield compression;sometimes sub 6 per cent depending upon the strength of the covenant and tenure. I am of the opinion toachieve a yield of 8.76 per cent on a 4.6 year WALE and with the significant future redevelopment upside,they’ve done very well.”

The sale of the 14 assets represented an initial yield of 8.76 per cent for the whole portfolio, whichMr Swanson explains is a reasonably high yield in the current market.

The properties are all fully leased with the majority of tenants across all states operating in the food packagingand manufacturing sector.

Founded in 2008, Altis now has more than $2.5 billion of assets under management. Last year, it alsosnapped up two of Mirvac’s A-grade office buildings in Rhodes, in Sydney’s west for $235 million.