Centuria Industrial REIT (ASX: CIP)  has moved to capitalise on the growing demand for cold storage facilities with the purchase of an Ormeau warehouse for $43 million.

Positioned in the Yatala Enterprise Area, a key corridor between Brisbane and the Gold Coast, the site totals 2.1 hectares and is located at 1 Lahrs Road. 

The acquisition takes CIP’s total investment for 2020 to more than $0.523 billion, and grows its Queensland asset portfolio to 15.

At a glance: 

• A 9,554sqm cold facility in Ormeau, QLD has been sold to Centuria Industrial REIT for $43 million at an initial yield of 5.5 per cent.
• The deal was conducted through Colliers International's Simon Beirne and Gavin Bishop, and JLL's Tony Iuliano and Gary Hyland.
• The asset provides a WALE of 6.5 years at acquisition. 

CIP Fund Manager Jesse Curtis, CIP Fund Manager, said the facility increased the Trust’s exposure to food and cold storage related users to almost 30 per cent by income. 

“A key growth thematic for CIP is the non-discretionary, food distribution and cold storage industries," he said.

“According to JLL research on the Cold Storage Sector and the Industrial Investment Market, there has been increased demand for refrigerated distribution centres, especially throughout the COVID-impacted months as online grocery shopping has increased.

"Additionally, there has been rising demand from both food and pharmaceutical-related users requiring climate-controlled facilities.

"This is creating an environment where tenant demand is outstripping supply.”

The modern Ormeau facility was constructed in 2015 and provides a minus-22 degree Celsius main chamber and a minus-28 degree Celsius blast chamber.

The property is 100 per cent occupied by Markwell Cold Storage, a subsidiary of Competitive Foods Australia – one of the largest privately-owned companies in the Australasia food sector.

It is a well-known handler of imported foods, quarantine foods, export foods and Halal meat with household-known customers including Coles, Woolworths and Bulla Ice Creams.

The asset provides a WALE of 6.5 years at acquisition.

Ross Lees, Centuria Head of Funds Management, said the asset complemented the existing array of high-quality assets underpinned by blue-chip tenant customers within the CIP portfolio.

“We are confident cold storage is a rising sub-market due to its long-term leases, strong tenant covenants, and unmet investment demand for this type of industrial facility," he said.

The Ormeau asset is a further addition to CIP’s asset base providing refrigerated space, along with the recently expanded Townsville Regional Distribution Centre constructed for Woolworths, which was officially opened last Friday 2 October.

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