ARIA expands direct property portfolio with first industrial acquisition in South Sydney
ARIA , the $17 billion super fund for Australian Government employees, announced today that one of its real estate investment managers, Arcadia Funds Management Limited, has successfully finalised the purchase of the City Close Industrial Estate at 37-41 O'Riordan Street Alexandria for $31.5 million.
City Close comprises a modern 16-unit industrial facility of 14,579sqm (37% office) together with 184 car parking spaces. Completed in 1989, it includes three separate buildings divided into units ranging in size from 533sqm to up to 1,775sqm offering flexibility to occupants. It is 96% leased to a range of tenants providing significant diversification across different industries and lease terms. The acquisition reflects an initial yield of 6.8%.
The estate occupies a site of 1.8 hectares, with close proximity to Kingsford Smith Airport (1.5 km), Sydney CBD (6 km), Port Botany Container Terminals (6 km) and Green Square Railway Station (1 km).
In this market, quality real estate assets remain highly sought after and tightly held by institutional investors due to the limited availability of land suitable for development.
"ARIA approaches this challenge differently to most investors of our large scale," Steve Gibbs , ARIA's chief executive officer said.
"To implement our property investment strategy we use employee-owned boutique mangers which offer a highly-skilled and dedicated focus aligned to the long-term interests of our members."
"A focus on absolute return investing, as opposed to building funds under management, is highly valuable . Boutique managers like Arcadia can provide this . They also have a small number of clients which translates to a clear focus, an alignment of interests and trust, and a good governance framework . "
Arcadia was established in late 2002 by the former CEO of Lend Lease Real Estate Investments, Stephen Newton , and the former head of wholesale funds management at Lend Lease Real Estate Investments, Hamish Flett .
Arcadia 's joint managing director, Stephen Newton said: "The City Close acquisition will provide ARIA with a quality modern core industrial investment in South Sydney, one of Australia 's leading industrial markets. Its location coupled with a shortage of land available for modern leased industrial premises creates very favourable long-term investment fundamentals for ARIA ."
City Close joins 1 Chifley Square , Sydney , Indooroopilly Shopping Centre, Brisbane; 101 Collins Street , Melbourne ; and 20% of Grosvenor Place , Sydney ; which collectively form the stable of direct property investments now owned by ARIA .
ARIA 's total property portfolio had a value of $2.2 billion as at 31 December 2006 . The Fund has a strategic asset allocation to property of 15%.
ARIA's intention is to continue to seek core and core plus commercial, retail and industrial investment opportunities in a number of key Australian real estate markets.
1 February 2007
