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News release


Asia Pacific’s second largest industrial deal transacts in Australia: GIC and Frasers Property Australia logistics portfolio sells for $1.073 billion

The high number of bidders for the portfolio demonstrates the weight of capital seeking exposure to Australia’s industrial market, equating to $10 billion of unsatisfied demand

​Global property services firm, JLL with co-agent Colliers International has transacted the second largest industrial property deal to date in the Asia Pacific market, with the sale of GIC and Frasers Property Australia's Australian logistics portfolio for $1.073 billion, subject to FIRB approval.

The portfolio of 26 prime, institutional grade logistics assets was the largest and highest quality offering ever made in Australia.  The portfolio was highly contested by a dozen investors, with the offshore investors introduced by JLL's Michael Fenton and Chris Key and the domestic investors introduced by Colliers. 

The five short-listed bidders were all offshore investors who lodged bids above $1 billion.

JLL's Head of Industrial – Australia, Michael Fenton said, "The competitive nature of the EOI process was a clear demonstration of the weight of capital vying for Australian industrial assets.  We can equate the unsuccessful bidders to an aggregate of $10 billion of unsatisfied demand seeking exposure to Australian industrial assets.

"The industrial sector continues to offer a yield premium to the office and retail sectors and lower volatility of returns relative to office markets.

"Offshore groups are seeking to expand beyond the office, retail and hotels sectors.  Australia's industrial market presents attractive investment characteristics including strong tenant covenants and long weighted average lease expiries (WALE).

"This portfolio offering was highly contested by offshore groups looking to acquire immediate scale in the largest ever offering of high quality, institutional grade logistics assets in Australia," said Mr Fenton.

The portfolio of assets comprised over 630,000 square metres of modern logistics assets, predominantly located in the core Australian East Coast markets of Sydney, Melbourne and Brisbane.  One asset was located in Perth.  The portfolio has strong lease covenants, with 83% of the portfolio occupied by multi-national or ASX listed companies including Coles, DB Schenker, Toll, Kmart, Nestle and Pacific Brands. The portfolio has an attractive lease expiry profile with a WALE of 5.7 years.  The largest asset is a state-of-the-art logistics facility at Eastern Creek in NSW, purpose-built for Kmart by Australand.

JLL's Head of Corporate Finance – Asia Pacific, Chris Key said, "We continue to see strong levels of capital allocation by offshore investors into Australia. For institutional investors it remains a core investment destination within the Asia Pacific region and benefits from having a mature and transparent market with sufficient liquidity to access attractive opportunities. When looking at the process undertaken on this portfolio it is very apparent that investors from around the world remain attracted to the Australian market and are prepared to aggressively pursue the right opportunities.

"Acknowledgement must go to GIC on the timing of their entry into the sector as they started aggregating the portfolio at a time when many other investors were still not actively seeking to commit to the sector.  It demonstrates the benefit of having the global reach, experience and knowledge of markets for a group like GIC that delivers a level of sophistication and conviction to invest in high quality assets at a time when others were not entering the market. This enabled GIC to build a unique portfolio of the highest quality assets on a scale which could normally be expected to take many years to aggregate.

"The competitive nature of the bidding for this portfolio demonstrates the continued demand and capacity for investment in Australian real estate and the industrial sector," said Mr Key.

The GIC and Frasers Property Australia portfolio sale represents the second largest industrial deal in Asia Pacific.  The largest was the sale by LaSalle Investment Management in 2012 of a logistics portfolio of 15 assets – JLF1 - in Japan for USD 1.6 billion.

The Australian industrial investment market had a record year in 2014, recording more than $5.1 billion of sales, exceeding the previous record set in 2007 and increasing 39% on 2013 transaction volume.