Irongate has this week launched an unlisted industrial property fund, kicking-off with the $57.25m acquisition of a seed asset - adjoining industrial properties Sydney’s Smithfield.

The Irongate Industrial Property Fund will focus on low-risk infill sites with large land holdings. In line with the Smithfield asset, which was acquired for below land-and-replacement costs, these assets are often underutilised, income- generating properties with strong positive rental reversion.

This strategy is a familiar one for the group, following in the footsteps of the Irongate REIT which was recently sold to Charter Hall for market leading returns. The Irongate Industrial Property Fund is the first Fund launched by the team since they completed a management buyout earlier in 2023.

This latest fund will be managed by Irongate with seed funding from both Irongate and its partner, the Johannesburg-listed Burstone Group (formerly Investec Property Fund). The Fund will acquire it’s seed asset in Smithfield alongside co-investment from APAC-focused private equity real estate investment group Phoenix Property Investors (“Phoenix”). This investment will mark Phoenix’s second in Australia in its Phoenix Pan Asia Core Plus Investments Fund.

Irongate CEO, Graeme Katz, says his team is looking forward to redeploying a familiar and successful strategy at Smithfield:

“For over 15 years we’ve navigated various cycles in the market. We believe the positive momentum in the industrial sector is sustainable, particularly in key infill areas.”

“The Smithfield acquisition is the first of many we intend to make in the short term. We have our sights set on a number of under-rented assets in key logistics hubs across the country.”

Phoenix’s Head of Australian Investments, Trent Winduss, agreed with the sentiment, adding “We are pleased to yet again partner with Irongate after establishing a relationship with the team as far back as 2019.”

“We are strong believers in the Australian market and the industrial sector more specifically. We look forward to adding to the portfolio by acquiring future assets together.”

The Fund’s seed asset, adjoining properties at 338-350 Woodpark Road and 1 Dupas Street, Smithfield, has a combined land area of 33,988sqm and a total NLA of 17,546sqm across eight buildings.

Further, the estate, with functional improvements focused on smaller users, is currently occupied by multiple tenants, and has an attractive 1.7-year WALE underpinning its appeal for the Fund.

“This key infill industrial asset was highly sought-after due to its short WALE allowing immediate rental upside for the incoming purchaser,” said selling agent Trent Gallagher of Colliers.

“The Western Sydney industrial market has a vacancy rate at present of 0.2 per cent which is causing significant demand for any up-and-coming vacancies resulting in record rents being paid by tenants on a regular basis,” Colliers’ Gavin Bishop added.

Irongate’s portfolio is now valued at well over $2 billion and includes the $1bn redevelopment of Younghusband in Melbourne’s inner west, a joint venture with Ivanhoe Cambridge; along with multiple joint ventures with Frasers, including the soon to be launched Bradmill site in Yarraville.

The property was exclusively sold to Irongate via Colliers Trent Gallagher, Gavin Bishop, Sean Thomson, and Peter Dale.