AFM Chief Executive Oﬃcer Michael Gutman said: “It is pleasing to witness the consistent progress we are making together with Cadence in acquiring and operating a range of strategically located industrial inﬁll sites with solid holding income and interesting prospects for value-add down the track.”
Cadence Managing Director, Charlie Buxton, said: “The purchase of the properties is a strong result for both organisations considering the current shortage of premium logistics facilities and development land surrounding Melbourne.”
“We’re pleased to have secured another two properties together with Assembly Funds Management. Land with potential is at a premium and the sites we’ve secured have a lot of underlying value we’re looking forward to bring to the surface,” said Buxton.
The ﬁrst of the two transactions is 55 Raglan Street, four contiguous industrial buildings situated on a combined 2.5-hectare site located in a preferred inﬁll industrial market of Preston, nine kilometres from Melbourne’s CBD. The site has three street frontages, comprises four separate titles and includes 23,508 square metres of improvements. It was purchased for $42.25m oﬀ market in a deal negotiated by Rory Hilton and Bryce Pane of CBRE, equating to $1,800 per square metre of building area and an initial yield of 4.5 percent.
“We expect Preston to beneﬁt from the ongoing gentriﬁcation of Melbourne’s inner-city markets, which in turn will continue to apply pressure on the availability of industrial zoned land in the area and surrounding sub-markets,” added Buxton.
“With that will come an increased tenancy demand so the site deﬁnitely has potential for an increase in value in the short to medium term,” he said.
The second of the two purchases are located at 345-353 South Gippsland Highway, Dandenong South. It is a 4,967 square metre warehouse situated on a prominent 13,723 square metre site located adjacent to South Gippsland Highway and the Pound Road interchange.
The property has a low site cover of 36 percent with surplus land providing for clear expansion capability at expiration of the existing lease.
AFM and Cadence have purchased the property with a two-year sale and leaseback providing holding income while approvals are sought prior to future expansion works.
“A short-term lease, strong location, development potential and favourable leasing conditions all point towards the kind of value we, along with AFM, are targeting in our investment strategy,” Mr Buxton said of the Dandenong South property.
The $10.7m transaction was negotiated by Daniel Telling and Gordon Code of Colliers International.
The other three industrial properties acquired to date under the AFM/Cadence strategy are in Sunshine and Dandenong.
In addition to the Industrial strategy AFM and Cadence have also acquired and repositioned the Sunshine Square LFR centre in 2020 for $39m.