Investec Australia Property Fund acquires industrial Melbourne property

Graeme Katz IAPF
IAP CEO, Graeme Katz.

Investec Australia Property Fund has announced the acquisition of a Melbourne industrial property for the amount of AUD 19 450 000 which represents an initial yield of 6.3%.

Situated at 36-42 Hydrive Close in Dandenong South, it is located 32 kilometres south east of Melbourne’s CBD. It offers excellent access to major arterials and freeways, including the South Gippsland Highway, Eastlink and Monash Freeway. Important infrastructure projects such as the Westall Road Extension, the AUD 100 million North-East Link and the AUD 300 million Moordialic Bypass are underway or planned to commence in the immediate vicinity of the property, further improving connectivity and accessibility.

The property is fully occupied by one of Australia’s leading milk and juice packagers, Pact Group Holdings Ltd with the lease expiring in 7.1 years and including a contracted annual rental escalation of the greater 3.5% and CPI.

The acquisition is accretive for the Fund and will be funded by utilising the Fund’s existing debt facility. Post the acquisition the Fund will be geared to 37.6% with a weighted average cost of debt of 3.71% per annum and hedged to 86.4% for an average of 6.2 years.

The property is a well-located, high quality industrial facility that provides a sustainable income stream for investors. The property complements  the acquisition of 6-8 and 11 Siddons Way in the neighbouring suburb of Hallam completed in late 2017,” said Katz.

“Dandenong South is a prime industrial precinct evidenced by the quality of occupiers including Amazon, Carter Holt Harvey, Toyota, Swire Cold Storage and Bosch. The property is occupied by a tenant that is part of an extremely strong ASX-listed group under a long-term lease with 7.1 years to run. The site coverage is low at 44% with the opportunity to develop additional lettable area or create full drive-around access if required in order to retain or attract tenants.”

IAPF CEO Graeme Katz is pleased to acquire another property in Victoria, one of Australia’s best performing economies, taking the value of the Fund’s total portfolio to AUD 967 million.

Settlement of the property is due to occur on 19 April 2018.