CorVal strikes $50 million deal on new Montague complex
CorVal strikes $50 million deal on new Montague complex
11 March 2014
Melbourne, 11 March 2014 –Specialist fund manager CorVal has become the latest investor to throw its weight behind the refrigerated logistics sector - tagged as the next growth asset in Australia’s industrial property market.
CorVal has acquired the yet to be completed Montague refrigerated logistics facility in the Melbourne suburb of Truganina in a deal valued in the order of $50 million.
CBRE’s Chris O’Brien, Matt Haddon and Rory Hilton negotiated the sale, which is the latest in Australia involving a refrigerated warehouse facility.
The deal closely follows the sale last year for $63.4 million of two refrigerated warehouses in Victoria and Queensland to Sydney-based investment group Propertylink.
Mr O’Brien said there was an increasing focus on the asset class in what has been dubbed a shift from a “mining boom to a dining boom”.
“Rising sales turnover in the food retail sector has been one of the key market drivers, underpinning strong occupier demand for this style of facility,” Mr O’Brien said.
“This has translated to a real investor acceptance and appetite now for the asset class and we fielded strong interest in Truganina from both offshore and domestic investors.”
CBRE Regional Director, Industrial & Logistics Services, Matt Haddon added; "Given the early spike in industrial investment activity in 2014, together with a number of additionallarge transactions in the pipeline and an ever growing appetite from investors to enter the sector, we expect to see turnover this year at levels that will comfortably exceed the $2.5 billion* recorded in 2013.”
Stage One of the Montague facility, being 16,960sqm, is currently under construction and is due for completion in November this year. It is situated in The Wyndham Industrial Estate, at 7-23 Dunmore Drive, approximately 20km west of the Melbourne CBD and close to major arterial road networks, specifically the Western Ring Road, the Western Freeway, Princes Highway and CityLink.
The facility offers a 20 year double net lease to Montague Cold Storage (MCS) - a group with an extensive food based client network operating in refrigerated warehousing in the south eastern states of Australia.
The first stage of the facility will cater for approximately 30,000 pallets and 70% of its capacity has already been pre-committed to some of Australia’s leading food brands. Managing Director, Mr Ray Montague commented that the Montague Family were very excited about this development and extremely positive and passionate about the future growth it provided for the group.
Montague CEO Mr Rod McQueen said the facility would reconfirm Montague as one of the major players in the Australian refrigerated logistics industry and build on its reputation for innovation and progression.
He said the building would house a broad range of frozen food from a number of suppliers and manufacturers, with long term contracts in place with major Australian household brands and international companies.
“The refrigerated warehouse market is becoming increasingly competitive as customers seek greater efficiencies through both well designed and maintained refrigerated logistics facilities in addition to broader cost reduction measures through proactively working with logistics services groups such as ourselves,” Mr McQueen said.
“We are continuing to work with a number of our clients on reducing unnecessary cost in their respective food logistics chains.”
He said Montague was expanding its network of refrigerated logistics facilities and had plans to expand this new facility by an additional 28,000 sqm, taking total warehouse space to 45,000sqm and in excess of 100,000 pallet capacity over the next 5-10 years.
"Consolidation of the refrigerated logistics market has accelerated since the GFC with many major manufacturers now opting to outsource their long term cold requirements and the sector is now in a strong long term growth phase,” Mr McQueen said.
Mr O’Brien said the Truganina facility was being developed jointly by both Montague and Qanstruct, the latter having delivered in excess of 240,000sqm of temperature controlled warehouse space and being recognised for their specialist ability in this area with four Master Builders awards for this specific type of construction across Australia.
The project has been several years in the making and Qanstruct Director Mr Mark Ruff said; “This is a fantastic example of Qanstruct working with their existing customer base to deliver a cost-effective, timely and workable solution.”
The Development Manager is Gibb Group, who has proven experience in interacting with investors in development fund through arrangements.
Mr O’Brien said the strong lease covenant had been one of the drawcards for purchasers as was the future development or expansion potential of the site, which has a total land area of 91,690sqm.
A further two stages of development are planned which will provide an additional 29,000sqm of gross lettable area.
The sale price translates to an initial sale yield of circa 8%.
*The $2.5 billion in sales relates to transactions valued at in excess of $5 million.
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About CBRE Group, Inc.
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