ARA LOGOS Logistics Trust says it has acquired five logistics properties in Brisbane, Australia for a purchase consideration of some $225.9 million on Oct 26, making this the first acquisition for the trust since its rebranding.
See: Logos and ARA explain strategy, say they are a perfect fit
In the same announcement, ARA LOGOS said it has also acquired a fund investment which has a 49.5% interest in New LAIVS Trust (New LAIVS Fund) and 40.0% interest in Oxford Property Fund for a consideration of some $178.5 million.
Both funds have a combined portfolio of five logistics properties in the states of New South Wales and Victoria in Australia.
The total consideration of the proposed acquisitions and fund investments is an approximate $404.4 million.
The five properties in Brisbane have a combined land area of 364,352 sqm with an average weighted average lease expiry (WALE) of 11.0 years.
The fund properties, through the New LAIVS Fund and Oxford Property Fund have a combined land area of 661,210 sqm with an average WALE of 12.4 years.
ARA LOGOS says the Australian industrial and logistics market, especially the eastern seaboard cities of Brisbane, Sydney and Melbourne, continues to be highly sought after by investors due to its strong market fundamentals, limited supply and favourable demographics.
It adds that the outlook for the country’s industrial market remains stable over the long term.
Following the transactions, ARA LOGOS’s deposited property value will increase by 28.2% to $1.7 billion from $1.3 billion, with the portfolio value attributable to Australia increasing 15.1 percentage points to 47.6% of ARA LOGOS’s portfolio.
The trust’s enlarged portfolio’s weighted average lease expiry (WALE) by net lettable area (NLA) will improve to 4.6 years from 2.8 years.
The blended net property income (NPI) yield of the New Property and Fund Portfolio, based on 100% interest in each of the New Australia Properties and Australia Fund Properties, is approximately 5.0%.
The acquisition will be subject to unitholders’ approval at an extraordinary general meeting (EGM) as the proposed acquisition and fund investments constitute an interested party transaction.
The manager says it intends to fund the acquisitions with the proceeds from the subscriptions by Ivanhoe Cambridge China and LOGOS, a private placement of new units to institutional and other investors, a non-renounceable preferential offering of new units to unitholders on a pro rata basis and external bank borrowings.
The details of the private placement and preferential offering will be announced at a later date.
“This is a transformational acquisition for ALOG as it expands our footprint across key economic hubs in the East Coast of Australia and paves the way for our next chapter of growth under LOGOS’ sponsorship,” says Karen Lee, CEO of the manager.
“The proposed acquisitions and fund investments, which comprise a portfolio of prime logistics properties, will not only strengthen ALOG’s portfolio, but importantly provide further income and geographic diversification, from an attractive market in Australia, which has stable fundamentals and strong growth potential,” she adds, stating that the proposed acquisitions and fund investments are “in line” with the manager’s execution of ARA LOGOS’s portfolio rebalancing and growth strategy to enhance the sustainability of the trust’s earnings.
As at 9.28am, units in ARA LOGOS are trading 0.5 cent lower or 0.8% down at 62.5 cents.