Investors have flooded Centennial's latest closed-end fund, tipping in ~$20m to acquire 100 per cent freehold interest in a 5.6-ha industrial and logistics facility in Brisbane's bayside suburb of Cleveland, 22km south east of the CBD.

The ~$20m capital raising, named Cleveland Industrial Park Trust, closed oversubscribed with wholesale and high net worth investors drawn to the Trust based on its strong return profile targeting an internal rate of return (IRR) of 14 to 15 per cent per annum and Centennial's established reputation as an active leasing and asset manager in the mid-space urban industrial and logistics sector.    

The national fund manager and developer acquired the site anchored by Harvey Norman and Barton Motors, at 19 Enterprise Street Cleveland for $31.2m from a private vendor in a sale jointly brokered by Colliers and CG Property in late August. 

The site was acquired at a 55 per cent discount to replacement cost with an underlying land value of 81 per cent.  

Located between Brisbane and the Gold Coast in Cleveland's industrial precinct, the site presented Centennial investors with a number of compelling factors given its capacity to deliver strong rental reversion, short WALE period of 3.1 years and underpinned by a high underlying land value in one of Queensland's fastest growing regions.  

According to Centennial's Head of Portfolio Management Nick Lidonnici, Cleveland Industrial Park which has a gross lettable area (GLA) of ~19,500sq m, is also under-rented by more than 20 per cent.

"This acquisition presents strong return profiles and through an active asset management strategy targeting rental growth based on current and future market forecasts, together with upcoming rental expiries and market demand, we are very confident to be adding Cleveland Industrial Park to our growing asset base that's now approaching $2.4 bn owned or under management."

Mr Lidonnici added Centennial was also drawn to the Cleveland estate based on its low site coverage sitting at 39 per cent. "The site lends itself to multiple value-add opportunities, including the potential to increase GLA by up to 3,600sq m through warehouse expansion."   

New supply of industrial and logistics facilities in the area is trailing tenant demand and Mr Lidonnici said Cleveland Industrial Park would appeal to a broad range of occupiers, including logistics and distribution operators, light manufacturing, food processing and even medical supply companies given the latter sector is within 1km of the Redland and Mater hospitals.

"The property’s proximity to both Brisbane and the Gold Coast and connectivity to the major transport routes of the Gateway and M1 motorways, plus its location in the heart of one of South East Queensland's fastest growing population centres, makes this acquisition a highly attractive investment with solid capitalisation fundamentals."

Colliers' Simon Beirne and CG Property's Michael Callow, who jointly brokered the sale on behalf of a private vendor said Centennial had made an astute acquisition based on Cleveland Industrial Park's low site coverage and value-add potential.  

"Centennial is widely recognised for its hands-on management and leasing capabilities and ability to turn around underperforming properties, particularly in the mid-space, urban I&L sector," Mr Beirne said. 

CG Property's Michael Callow agreed adding: "The site's location within a tightly held industrial corridor in the growing Redlands LGA, coupled with the site's short WALE period exhibits all the right indicators in delivering positive rental uplift through value-added opportunities."   

Centennial's purchase of the Cleveland site continues on from a busy acquisition period for the mid-space urban, last mile and infill I&L specialist. The group has recently finalised the purchase of a large industrial site south west of Brisbane at Tivoli for $35.5m and has a further two acquisitions in the pipeline with all three valued at approximately $100m.

Centennial is known for its strategy of releasing hidden value in mispriced assets for its wholesale investors and expects Cleveland to emulate this formula. It also anticipates an increase in similar high quality prospects into the future. The addition of Cleveland Industrial Park brings Centennial's total assets to 83 and over $2.4 bn under management.   

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