Jandakot Airport, Perth. Image: Wikimedia Commons, Canva.
  • Properties acquired in WA, VIC, NSW
  • One property wholly leased to Australia Post
  • Also includes Jandakot Airport in Perth

Dexus (ASX: DXS) and APN Industria REIT (ASX: ADI) have acquired a portfolio of industrial properties worth a combined total of $1.5 billion. The $1.5 billion includes the fund-through cost of Lot 2, 884-928 Mamre Road, Kemps Creek and excludes forecast future development spend.

The acquisition includes three properties across Western Australia, Victoria, and New South Wales:

Property City, State DXS ownership ADI ownership Notes
Jandakot Airport Perth, Western Australia 66.70% 33.30% Comprises 49 properties, circa 80 hectares of developable land, and an airport operating business
Lot 2, 884-928 Mamre Road Kemps Creek, New South Wales 50% 50% Fund-through development
2 Maker Place Truganina, Victoria 0% 100% Logistics facility leased to Australia Post

“In addition to the transactions announced today, we remain focused on meeting the investment objectives of our third party capital partners, with the Dexus Industrial Partnership (DITA) in exclusive due diligence on the circa $123 million acquisition of 113-153 Aldington Road in Kemps Creek, NSW,” said Dexus CEO, Darren Steinberg.

Ross Du Vernet, Dexus Chief Investment Officer said, “The acquisitions will provide our industrial business with a meaningful footprint in Western Australia and new product in the Sydney market to service our growing customer base.”

“Across the group, the industrial portfolio is expected to grow to $11.3 billion (4.6 million square metres) post completion of the near term developments and recent acquisitions.”

APN Industria REIT Fund Manager, Alex Abell said, “The Acquisitions capitalise on the strong momentum in the industrial sub-sector, with growing e-commerce take-up in Australia set to drive approximately 2.4millionsquare metres of industrial space take-up between now and 2025.”

“Following our entry onto the Dexus platform, we’ve benefitted from having access to unique growth opportunities as demonstrated by this transaction.”

Equity raising

In order to fund the acquisition, APN Industria will undertake a fully underwritten circa $350 million equity raising to partially fund its share of the acquisitions at a fixed issue price of $3.45 per security.

The offer comprises an institutional placement to raise approximately $100 million, and a 1-for-3 non-renounceable entitlement offer to raise approximately $250 million.

Dexus, as the fund manager and largest security holder of ADI also noted it intends to take up its full entitlement under the entitlement offer, and has also provided a commitment to sub-underwrite approximately $39 million of the Entitlement Offer.

Financial impact

ADI said, including the impact of the acquisitions, equity raising and subject to current market conditions and no unforeseen events, the guidance for FY22 funds from operation is 18.1 – 18.5 cps (FFO yield 5.2% – 5.4% on issue price) and FY22 distributions of 17.3 cps (DPS yield of 5.0% on issue price).

ADI’s pro forma gearing is expected to be approximately 29.1% following the acquisitions and equity raising.

Jandakot Airport

Dexus will acquire a 66.7% interest in the entities that own a 76-year ground lease at Jandakot Airport, WA, with ADI acquiring the remaining 33.3% interest, for a combined acquisition price of $1.3 billion.

The existing structure includes senior asset-level debt of $405 million which will remain in place at acquisition, reflecting a combined equity commitment of $895 million.

Dexus noted the acquisition was made off-market, with the $1.3 billion combined acquisition price attributed to:

  • $875 million for a diversified stabilised portfolio of 49 modern prime industrial properties leased to more than 54 tenants across circa 360,000 square metres, reflecting a 5.2% initial yield and 4.7% cap rate,
  • $225 million for circa 80 hectares of immediately developable land, of which 12 hectares is currently under Heads of Agreement and the remaining 68 hectares is approved under a current master plan,
  • $200 million for an operating airport deriving income from long term ground leases, landing fees and infrastructure services, reflecting a circa 19x EBIT multiple.

The stabilised portfolio is 100% occupied with a weighted average lease expiry of 7.6 years. The operating airport supports a long-term diverse and secure income stream, with a weighted average lease expiry of more than 14.6 years.

Lot 2, 884-928 Mamre Road, Kemps Creek

The New South Wales property will be split 50-50 by Dexus and ADI, the 42,500 square metre prime logistics facility is a fund-through development that was acquired for a combined total consideration of $125.4 million.

2 Maker Place, Truganina

The Victorian property will be completely owned by ADI, and was acquired for $69 million. In August 2021, Dexus exchanged on the property with the ability to nominate an alternate purchaser within the Dexus group. The property will now settle with ADI nominated as the purchaser.

The property spans approximately 30,000 square metres, the property is 100% leased to Australia Post, with 4.5 years remaining on the initial term, with a further five-year extension option.

The 66,590 square metre site has further development potential across 16,740 square metres of land which could accommodate an additional 11,537 square metres of warehousing.

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