The Straits Trading Co. said on Wednesday it entered a joint venture with Australian property developer Commercial & General to acquire three logistics assets.
Under the new joint venture, Straits Trading’s subsidiary Straits Real Estate will hold 80 percent of an asset-holding trust called ILP No.1 Trust and 50 percent of ILP Managers Pty., a company which provides investment management services, it said in a filing to SGX on Wednesday after the market close.
ILP No.1 Trust, which already holds to assets in South Australia, will acquire to other assets in South Australia and another in Victoria, for a combined value of A$130.5 million, or S$128.9 million, for the five properties, Straits Trading said.
“With this venture, we are attracted to the strong and immediate cashflow, backed by good-credit tenants such as Coca-Cola Amatil and Incitec Pivot. It obviously helps that Australia is a vibrant and large market, offering tremendous potential for growth,” Desmond Tang, CEO of Straits Real Estate, said in the statement.
“We have a strong partner in Commercial & General and we plan to tap on our joint venture to ramp up our Australia strategy,” Tang said.
The latest acquisitions are a mixed-use office and warehouse facility in Bayswater, Victoria, a distribution center in Salisbury, South Australia leased to a single blue-chip tenant on a long-term lease, and a land parcel in Salisbury, South Australia, it said, adding the acquisition of the land parcel was conditional upon the approval of the Foreign Investment Review Board of Australia.
The aggregate net lettable area of the properties is around 76,000 square meters, while the land parcel has a development area of around 15.2 hectares, it said.
The existing two properties in the trust were a distribution center in Port Adelaide, South Australia, with a net lettable area of 17,000 square meters, and a to-be-build distribution center in Kilkenny, South Australia, with a net lettable area of 50,000 square meters, it said.
“This marks the group’s first investment in an operating platform in Australia, underscoring its commitment to grow its Australian portfolio,” Straits Trading said.
“A positive sector outlook and attractive risk adjusted returns are two key reasons behind the group’s rapid entry into the Australian industrial property sector which largely comprises logistics-related facilities,” it added. “The sector is supported by strong economic fundamentals driven by population growth, GDP growth, a growing e-commerce industry, and infrastructure spending.”
The joint venture will be headed by Mark Brammy, who will oversee day-to-day operations and who is an executive director of Commercial & General, it said.
Straits Trading also has two prime commercial assets in the central business districts in Sydney and Perth, it said.