Mirvac has expanded its industrial property portfolio with the purchase of five assets from the Altis Real Estate Equity Partnership Fund No. 1 for a total of $224.1 million.
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The properties have been on the market for some time by Altis, as it repositions its investment strategy. Four are located across Sydney - including 39 Herbert Street, St Leonards, worth about $150 million - and one is in Adelaide.
Part of the refocus resulted in Altis last week buying the Lake Haven Home Mega Centre in regional NSW for $40.5 million.
Mirvac chief executivce Susan Lloyd-Hurwitz said the acquisition enhanced the group's operating leverage in the industrial sector, and increased the Mirvac Property Trust portfolio's industrial exposure to 9 per cent, from 6 per cent at June 30, 2014. Four of the properties were sold by Gavin Bishop and Roger Miller of Colliers International, while Angus Klem, senior director sales and leasing at CBRE, advised on the St Leonards asset.
"With the Altis portfolio predominantly situated in Sydney, we are pleased to bolster our industrial position in this competitive market, and over 90 per cent of our industrial portfolio is now weighted towards Sydney as a result of this transaction," Ms Lloyd-Hurwitz said.
Mr Miller said Colliers received a total of 30 enquiries for the whole portfolio, both from Australian real estate investment trusts (AREITs) and offshore REITs.
"This was mainly due to the flexibility in the sale process we ran and the quality of the assets which were acquired by Altis over a four year period. Mirvac were a logical purchaser for this portfolio given their industrial and development expertise," Mr Miller said.
Shaun Hannah of Altis Property Partners said they were pleased with the result.
"Altis has delivered on our promise to investors to deliver outstanding returns through the judicious purchase of quality assets and active asset management to manufacture a core portfolio. Altis continues to manage over $700 million of assets and has strong support from investors to continue the acquisition of industrial and office property throughout Australia," Mr Hannah said.
According to recent research from Colliers International, total returns for industrial property have strengthened since December 2012 to 12.1 per cent in the June quarter, their highest rate since March 2008.
"From an investment perspective the industrial market continues to be the market leader, with total returns hitting a peak of 11.7 per cent ahead of other commercial sectors such as retail at 11 per cent and office returns at 9.6 per cent," Mr Miller said.
The Altis sale also comes a week after Mirvac walked away from plans to redevelop the City Tattersalls building in Sydney's Pitt Street Mall. At Mirvac's quarterly update on October 29, Ms Lloyd-Hurwitz said that after an "enormous effort on the part of both parties, we couldn't reach an agreement that served both our interests".
"It underscores the point that we will continue to be very, very disciplined in what we do and don't do according to our hurdle rates and returns and risk appetite," she said.
"I think what we will take away from it is that we won't proceed with things that we believe to either have too much risk or insufficient return."
Meanwhile Frasers Centrepoint, which recently acquired Australand for $2.6 billion, announced that Bob Johnston will lead the combined Frasers Property Australia and Australand businesses. As a consequence, Guy Pahor will be stepping down as chief executive of Frasers Property Australia.
