GIC in A$2b joint venture to invest in Australian logistics properties

The joint venture will acquire three development opportunities, including the one at 27 Distribution Drive in Truganina, Victoria, with a total future completion value of A$500 million.
The joint venture will acquire three development opportunities, including the one at 27 Distribution Drive in Truganina, Victoria, with a total future completion value of A$500 million.PHOTO: DEXUS

SINGAPORE - Singapore sovereign wealth fund GIC and Australian Reit Dexus have established a joint venture (JV) known as Dexus Australian Logistics Trust - a new A$2 billion (S$1.99 billion) unlisted trust - to invest in logistics properties Down Under.

Subject to approval, GIC will be the JV's foundation investor, taking an initial 25 per cent investment in the core portfolio, with put and call rights to acquire an additional 24 per cent by June 2020.

GIC will also take an initial 49 per cent interest in the JV's A$1.4 billion seed development portfolio.

The JV will be seeded with a logistics portfolio that comprises mostly core logistics facilities in "strong performing precincts" with "good access" to major arterial roads, rails and ports, located mostly in Sydney and Melbourne, GIC said in a media release on Monday morning (Nov 26).

The weighted average lease expiry of the portfolio is 5.3 years, with occupancy at 98 per cent.

In addition, the JV will acquire three development opportunities with a total future completion value of A$500 million. It will continue to pursue an acquisition and development strategy targeting core logistics properties in Australia, said GIC.

Mr Lee Kok Sun, chief investment officer of GIC's real estate division, said: "This investment reflects GIC's confidence in the long-term potential of Australia's logistics sector. We believe the structural and consumption growth in Australia, particularly from favourable demographics and growth in e-commerce, will continue to drive demand for logistics properties."

He added that the portfolio of "quality assets in strong locations" is well-positioned to capitalise on this and generate steady income over the long term.