Asset part of national portfolio, highlights growing sale/leaseback trend in WA market
National construction equipment sale and hire firm Tutt Bryant has sold its South Guildford facility for $6.5 million in a sale and leaseback deal which will see the company stay on at the site through to at least 2027.
The Perth property formed part of a portfolio of four properties sent to market by Tutt Bryant, with the other assets – one in Brisbane and two in Sydney – selling for a total of $16.8 million.
The buyer of all four properties was national wholesale property syndicator and developer Primewest, with the national portfolio sale brokered by Colliers International WA Director Special Industrial Projects Wayne Chorley.
The Tutt Bryant properties will form the basis of a new $80 million Industrial Trust launched by Primewest earlier this year. Once fully invested, the Trust is expected to comprise approximately ten properties across the country, giving investors a diversified exposure to the industrial market and an income return in excess of nine per cent.
The South Guildford Tutt Bryant facility is located at 50 Great Eastern Highway, and comprises a 3,005sqm office-workshop on a total land area of 20,000sqm.
Tutt Bryant, a fully-owned subsidiary of Singapore-listed firm Tat Hong, sold all four properties in the national portfolio with a 12-year leaseback.
Mr Chorley said the portfolio, which was taken to market via an expressions of interest campaign, had attracted considerable interest with multiple offers received.
“This was a national portfolio of extremely well-located industrial assets, with the additional appeal of a guaranteed long-term lease to a major tenant attached,” he said.
“In the case of the WA property, the size of the property also offered the potential for further development in the future.”
Mr Chorley said the Tutt Bryant portfolio sale – together with the recent $4.225 million sale of a Bayswater property – highlighted the growing popularity of industrial sale/leaseback transactions.
The Bayswater property, at 223 Collier Road, offered 2,362sqm of office/workshop on 7,789sqm of land and was sold with a 4.5 year leaseback in place to Turfmaster, which has occupied the site for 12 years.
The asset was sold off-market to a private investor in a deal brokered by Colliers International Industrial Sales and Leasing Executive Andrew Fife. The sale generated a yield of 7.1 per cent.
“The industrial investment market continues to hold the title of the best-performing asset class of all commercial property, and the level of enquiry we see reflects that,” said Mr Chorley.
“The demand for investment-grade stock is unprecedented, and is coming from the full spectrum of buyers from institutions and high net worths to syndicators and self-managed super funds – but there is a significant undersupply of properties being brought to market with leases in place.
“We are receiving calls on a weekly basis from investors seeking to put their money into leased industrial property, but the issue we have at the moment is unlocking the stock.”
Mr Chorley said the level of demand combined with constricted supply was placing downward pressure on yields, as evidenced by both the Tutt Bryant and Bayswater sales.
“As long as we have that imbalance between supply and demand in this part of the market, it’s difficult to see that changing,” he said.