TOLL SALE SETS 8% YIELD BENCHMARK

A BRAND new office/warehouse complex in Melbourne’s western industrial hub of Altona North has been sold by Toll Holdings on a yield of 8%. Toll developed the property at 53 – 61 Horsburgh Drive, Altona North. The property was sold by real estate agents Vinci Carbone Property for $22.0 million to a private Melbourne investor, representing a yield of 8.0% which is arguably one of the best industrial sales for some time. Toll will leaseback the facility for 12 years from settlement. The property is currently under construction and is being built to the specific requirements of NQX Freight Systems – a wholly owned subsidiary of Toll Holdings Limited. The property comprises a purpose built office warehouse of 18,100 sqm, 4,264 sqm of awnings on land of 5.416ha. A substantial component of the improvements comprises 30,000 sqm of medium to heavy duty hardstand. The Toll Property Group purchased the former DOW Chemicals 50ha some years ago to develop a new industrial estate primarily to house many of its logistics business units. It is now occupied by Nestle, Coles Group, Toyota Australia, Target Australia, SCT Transport, Fowles Motor Group and many more. Vinci Carbone Property director Joseph Carbone said this result is testament to the strength of the private investor market and the lack of quality industrial investment stock currently available for sale. “We are seeing private high net worth investors are prepared to step up for premium quality property assets. Obviously the 12 year lease covenant to Toll together with significant depreciation benefits were major factors in determining the suitability of this asset,” he added. Toll’s director of property Michael Fox said this was the second parcel of land Toll had purchased to develop logistics facilities to house a number of Toll’s business units. Toll’s first purchase in Altona was the former BP Oil Refinery 10 years ago and Toll has successfully developed and on-sold eight buildings in the first estate on long leaseback arrangements. It has been a while since we have seen a result like 8% for an industrial property over $20 million. We have seen some smart private money start to come into the market of recent months. I hope this result helps those trusts and institutions that are being told that the market is at 8.5% to 9.5% and beyond - its not! “This is the first development in Toll’s second estate at Altona and we are elated at the result Vinci Carbone delivered,” Fox concluded.